May 8, 2020 / 10:28 AM / a month ago

VEGOILS-Palm jumps over 3% on demand revival hopes; posts weekly drop

* Palm up 3.75%, clocked 3.3% weekly loss

* Indonesia end-March palm oil stocks dip to 3.42 mln tonnes (Adds closing prices)

By Mei Mei Chu

KUALA LUMPUR, May 8 (Reuters) - Malaysian palm oil futures climbed as much as 4% on Friday, buoyed by hopes of a revival in demand due to the easing of coronavirus-led curbs in some countries and a fall in inventories in top producer Indonesia, but the contract posted a weekly decline.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 73 ringgit, or 3.75%, to 2,019 ringgit ($466.17) per tonne.

Palm oil hit a 10-month low on Wednesday, while losing 3.3% this week, pressured by forecasts of April end-stocks in Malaysia rising 10% from March as lockdowns around the world sharply reduced demand.

Malaysian markets were closed on Thursday for a holiday.

Top importing nations, including India and China, are experiencing lower stockpiles due to the lockdown, and demand will surge once their restrictions are lifted, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari Sdn Bhd.

“The scenario of lower edible oil stockpiles both in China and India encouraged the covering we witnessed in the market today,” said Paramalingam Supramaniam.

Meanwhile, palm oil stockpile in Indonesia, the world’s largest palm producer, by the end of March fell to 3.42 million tonnes due to lower monthly output, down from 4.08 million tonnes a month earlier, the Indonesia Palm Oil Association (GAPKI) said on Friday.

Crude palm oil output in Malaysia, the world’s second-biggest producer, will drop in 2020 by 1% from a year earlier because of drier weather last year limiting yields and the country’s coronavirus-driven restrictions, the Malaysian Palm Oil Council (MPOC) said.

Oil prices rose on Friday as more countries moved ahead with plans to relax economic and social lockdowns put in place to halt the coronavirus pandemic and as more output was shut in.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

Dalian’s most-active soyoil contract gained 0.41%, while its palm oil contract rose 0.97. Soyoil prices on the Chicago Board of Trade were up 0.69%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. ($1 = 4.3310 ringgit)

Reporting by Mei Mei Chu; Editing by Aditya Soni, Rashmi Aich and Louise Heavens

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