Key Takeaways
- Malaysian palm oil futures reached a 15-week high.
- Strong oil prices and Dalian’s rebounding palm olein futures supported the rise.
- The benchmark contract is set for a third consecutive weekly gain.
Palm oil futures on the Bursa Malaysia Derivatives Exchange hit a 15-week high, rising to 4,751 ringgit ($1,161.33) per metric ton by midday Friday. This marks a significant increase from its previous levels and is set for a third consecutive weekly gain.
The rise in palm oil prices was driven by strong crude oil futures, which have been on an upward trend, as well as the rebound of Dalian’s palm olein futures. According to Anilkumar Bagani, commodity research head at Sunvin Group, the market is experiencing a 'newly triggered bullish rally' due to these factors.
The benchmark contract has already risen 3.35% this week, reflecting the current positive momentum in the market. The strength of palm oil is also influenced by the perspective of tightness in palm oil exports from Indonesia, driven by a newly launched B50 biodiesel mandate and fresh demand from China.
Dalian’s most-active soyoil contract gained 0.88%, while its palm oil contract rose 1.33%. In contrast, soybean oil prices on the Chicago Board of Trade dropped 0.23%. Palm oil tracks the price movements of rival edible oils as it competes for a share in the global vegetable oils market.
Victor Almeida, president of industry association Abrapalma, suggested that Brazil could more than triple its planted area for producing palm oil over the next decade by expanding cultivation on already deforested land in the Amazon. This expansion is expected to impact future supply dynamics and pricing trends.
Brent oil prices hovered above $100 per barrel on Friday, heading into their fourth week of gains. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock, contributing to its upward trajectory.
Technical analyst Wang Tao from Reuters predicted that palm oil may extend its gains to 4,771 ringgit per ton as it has cleared resistance at 4,730 ringgit and climbed above a rising channel.
