Palm oil falls as coronavirus death toll climbs

[KUALA LUMPUR] Malaysian palm oil futures inched lower on Monday as mounting worries over the severity of the coronavirus epidemic in China, the country's second largest buyer, pressured prices.

More than 900 people have died in China's central Hubei province as of Sunday, surpassing the death toll from the Sars (severe acute respiratory syndrome) epidemic in 2002/2003.

The benchmark palm oil contract, for April delivery, on the Bursa Malaysia Derivatives Exchange was down 0.53 per cent at RM2,798 (S$937.57) per tonne during the midday break.

Palm oil rallied 8 per cent last week, the most since November 2016, on expectations of tighter January inventories.

Meanwhile, official January data on supply and demand that came out just after the midday close showed that palm oil end-January inventories fell 12.7 per cent to 1.76 million tonnes from the previous month.

Production slumped 12.6 per cent month-on-month to 1.17 million tonnes, according to the report from industry regulator the Malaysian Palm Oil Board (MPOB).

"Now that we have confirmation of MPOB numbers, the lower but expected stock values will offer a boost for prices to trade higher," said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

Meanwhile, Feb 1-10 exports fell between 20 per cent and 26.8 per cent, cargo surveyors Intertek Testing Services and Amspec Agri Malaysia said on Monday.

Dalian's most-active soyoil contract gained 0.2 per cent, while its palm oil contract was up 0.3 per cent. Soyoil prices on the Chicago Board of Trade edged down 0.3 per cent.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may retest a support at RM2,795 per tonne, a break below which could cause a fall to RM2,711, Reuters technical analyst Wang Tao said.

REUTERS