Palm Oil Flat On Uncertain Overseas Markets, China Bird Flu Worries

KUALA LUMPUR: Malaysian palm oil futures were flat in choppy trade on Friday, with no clear guidance from overseas markets and investors wary of a bird flu outbreak in China that could crimp demand from the world’s second largest edible oil buyer.

Investors and analysts say an escalation of the H7N9 bird flu outbreak in eastern China, where the death toll has hit 10 victims, could spark a potential slowdown in feed demand and negatively affect commodities, including palm oil.

“Soybean is one of the key ingredients in chicken feed and China is among the world’s biggest grains buyer,” Phillip Futures said in a note on Friday. “If H7N9 gets much (more) serious, commodities market might be affected.”

The benchmark June contract on the Bursa Malaysia Derivatives Exchange was flat at 2,352 ringgit ($774) per tonne by the midday break, heading towards its third straight weekly loss with a decline of 0.3 percent this week. Prices were rangebound between 2,343 and 2,367 ringgit.

Total traded volumes were thin at 8,428 lots of 25 tonnes each, compared to the usual 12,500 lots for the morning session.

Traders were also slightly anxious that bullish inventory and export data in March could mean palm oil stocks are bottoming out in Malaysia, the No.2 producer of the tropical oil, and higher stockpiles could return in the coming months.

Official data on Wednesday showed that stocks in the southeast Asian country declined a steeper than expected 10.9 percent in March to 2.17 million tonnes, from 2.43 tonnes in February.

“The market is stuck in a tight range. There is minimum movement in overseas markets, and at the same time the Dalian is down slightly — there’s (also) a bit of worry about the bird flu in China,” said a trader with a foreign commodities brokerage in Kuala Lumpur.

 

Source : Business Recorder

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