Key Takeaways
- Malaysian palm oil futures rose due to bargain buying.
- High stocks in Malaysia and Indonesia capped gains.
- Palm oil prices may revisit July 9 high of 4,630 ringgit per ton.
Malaysian palm oil futures saw a rise on Thursday, driven by bargain buying. However, the increase was limited as stocks in Malaysia and Indonesia continued to grow, dampening gains.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange increased by 5 ringgit or 0.11%, closing at 4,606 ringgit ($1,131.70) per metric ton. A trader based in Kuala Lumpur stated that trade below 4,600 ringgit per ton attracted buying interest.
Despite the rise, commodity research head Anilkumar Bagani from Sunvin Group, a Mumbai-based brokerage, pointed out that relatively higher palm oil stocks in Indonesia and Malaysia were weighing on prices. According to his analysis, Indonesia’s palm oil inventory increased by 18.9% month-on-month in May after exports fell sharply.
Malaysia has raised its August crude palm oil reference price to maintain the export duty at 10%, according to a circular from the Malaysian Palm Oil Board. This move is aimed at supporting domestic producers and ensuring competitiveness in international markets.
The European deforestation policy and delays in the release of allocations for B50 biodiesel mandate from Indonesia are also affecting palm oil prices, as noted by Bagani. Additionally, Malaysian palm oil exports for July 1-15 are expected to rise between 4% and 12.4% compared to the previous month, according to cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia.
In related markets, Dalian’s most-active soyoil contract declined by 0.34%, while its palm oil contract dropped by 0.71%. Soyoil prices on the Chicago Board of Trade increased by 0.18%.
Crude palm oil futures is trading within the range of 4,500-4,700 ringgit per ton, thus trade below 4,600 ringgit attract buying interest.
A Kuala Lumpur-based trader
The delay in release of allocations for B50 biodiesel mandate from Indonesia and the European deforestation policy is affecting palm oil prices.
Anilkumar Bagani, commodity research head at Sunvin Group
