Key Takeaways
- Malaysian palm oil futures gained for a second straight session.
- Crude oil prices continued to climb, making palm oil a more attractive biodiesel feedstock.
- Expectations of tight supply next year due to Indonesia’s B50 biodiesel mandate and potential production reduction due to El Niño supported prices.
Malaysian palm oil futures rose for a second consecutive session on Tuesday, following a climb in crude oil prices. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was up 33 ringgit, or 0.68%, at 4,883 ringgit ($1,196.08) a metric ton at close.
Anilkumar Bagani, research head at the Mumbai-based vegetable oil broker Sunvin Group, stated that BMD CPO futures were seen trading higher due to gains in energy prices. He added that additional support came from expectations of tightness next year due to Indonesia’s B50 biodiesel mandate and a potential production reduction due to El Niño.
Oil prices rose more than 2% on Tuesday after attacks on Saudi Arabian energy infrastructure left the kingdom’s East-West pipeline offline, raising fears that damage to energy infrastructure and transport routes could take longer to repair. This development made palm oil a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract dropped 1.07%, while its palm oil contract shed 0.46%. Soyoil prices on the Chicago Board of Trade were up 0.58%. Palm oil tracks rival edible oils, as it competes for a share of the global vegetable oils market.
Malaysia has raised its October crude palm oil reference price to a level that maintains the export duty at 10%, a circular on the Malaysian Palm Oil Board website showed on Tuesday. Cargo surveyors estimated that exports of Malaysian palm oil products for September 1 to 15 fell between 17.8% and 25.6% from a month earlier.
India’s palm oil imports in August rose 7% from July to 782,761 metric tons, the Solvent Extractors’ Association of India (SEA) said on Tuesday. The ringgit, palm’s currency of trade, weakened 0.21% against the dollar, making the commodity cheaper for buyers holding foreign currencies.
Palm oil may bounce further into the 4,930 ringgit to 4,964 ringgit per metric ton range, after breaking above a falling trendline, according to Reuters technical analyst Wang Tao. This suggests a potential for further gains in the near term.
BMD CPO futures were seen trading higher today following gains in energy prices.
Anilkumar Bagani, Research head at the Mumbai-based vegetable oil broker Sunvin Group
