-- Malaysian palm oil futures eased on Wednesday due to slowing exports, although elevated crude oil prices that incentivize biofuel use limited loses.
The Bursa Malaysia Derivatives' May crude palm oil contract dropped 0.07% to 4,465 Malaysian ringgit ($1,129.81) per metric ton. The June contract fell 0.38% to 4,491 ringgit/mt in midday trade.
Following a robust export performance in Q1, Malaysian shipments for the period April 1-25 reportedly declined month over month between 15.7% and 16.8%, based on cargo surveyors' estimates.
Purchases from key importer India reportedly dropped, as buyers preferred to wait for prices to normalize before replenishing stocks.
In China, import margins have recently improved after global palm oil prices declined from contract highs hit following the onset of the US-Iran conflict.
"One new September palm oil cargo was purchased yesterday, while spot transactions remain limited to essential buying," Chinese price reporting agency MySteel said.
In top palm oil producers Indonesia, Malaysia, and Thailand, domestic demand is expected to increase with expanding biofuel use.
However, Malaysia's move to raise its palm-based biodiesel blending to 15% from the current 10% may have limited benefits to industrial manufacturers, while it may be good for biofuel producers, Free Malaysia Today reported, citing Federation of Malaysian Manufacturers president Jacob Lee.
Industrial fuel costs will remain largely influenced by global market pricing, and manufacturers, who are not recipients of fuel subsidies, will remain exposed to market volatilities, Lee reportedly said.
In Indonesia, palm oil farmers raised opposition to a proposed surface water tax, amounting to 1,700 Indonesian rupiah ($0.10) per tree per month, as this could cut farmers' income by more than 6%, Palm Oil Farmers Union national council chairman Mansuetus Darto told The Jakarta Post.
The Indonesian Palm Oil Producers Association, Gapki, reportedly said the move would add an "unsustainable" cost layer to the industry that was already burdened by several government charges, including export levies, domestic market obligation, and the upcoming export proceeds rule.
On supply side, production may rise in the near term following a seasonal low. It may weaken in the medium term as the El Nino weather phenomenon develops, with more than 90% chance of it happening in Q4.