by BLOOMBERG / pic by TMR FILE
PALM oil ended at a record high as poor supplies because of flooding and labour shortages in second-biggest grower Malaysia outweighed concerns over weaker demand.
The tropical oil, used in everything from cooking oil to ice cream and detergent, jumped 0.9% to RM5,072 a tonne, surpassing its previous record close of RM5,071 set in October.
“Despite the weaker demand for Jan 1 to Jan 10 capping prices, palm oil is still supported by weather uncertainties and labour shortages in the first quarter, as well as a much lower inventory carryover from December,” said Marcello Cultrera, an institutional sales manager and broker at Phillip Futures Sdn Bhd.
“January palm supply is expected to further decrease as buyers in destination markets start restocking.”
Malaysian stockpiles shrank 12.9% to 1.58 million tonnes in December from the previous month, according to official data from the Malaysian Palm Oil Board on Monday, compared to 1.7 million tonnes estimated in a Bloomberg survey.
That’s as production tumbled the most in 11 months to 1.45 million tonnes.
An industry estimate showing output in Malaysia’s southern peninsula dropped 32% in the first 10 days of January from a month earlier also supported the market, said Anilkumar Bagani, research head of Mumbai-based Sunvin Group.
Dwindling demand, however, may put pressure on the market. Cargo surveyor SGS Malaysia reported shipments plunged 41% in the first 10 days of January from a month earlier as exports to China and Europe slumped.