Palm oil retreats on concerns of rebounding supplies in Malaysia

Palm oil retreated on concerns about swelling supplies in the second-biggest grower Malaysia, although a brighter demand outlook cushioned the fall.

Higher production levels and rising stockpiles are weighing on the market, which is being further pressured by weakness in soybean oil and crude oil prices, according to Abdul Hameed, director of sales at Manzoor Trading Co in Lahore.

The Malaysian Palm Oil Board last week reported inventories rose in March for the first time in six months, with output jumping 17% from February.

Still, surging Malaysian exports in April are helping to cap palm’s losses. Malaysian shipments climbed 29% in April 1-10 from a month ago, fuelled by bigger purchases from China and the Middle East.

Palm has become more competitively priced now that it’s trading at a discount to soybean oil, and that’s boosting expectations of improved demand this month, Hameed said. “A recovery is anticipated, driven by renewed buying interest from major consumers like China and India,” he added.