KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday, supported by higher prices of crude oil, continuing a modest recovery for a second straight session after their biggest weekly drop since 1986.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 3.08%, or 178 ringgit, to 5,952 ringgit a tonne at the midday break.
Oil futures extended gains on news that some nations of the European Union were considering sanctions on Russian oil and as attacks on Saudi oil facilities sent jitters through the market.
Stronger crude makes palm a more attractive option for biodiesel feedstock. A Kuala Lumpur-based trader said with lack of fresh news, the contract will continue to track firmness in crude oil and could inch higher as long as the Ukraine war is not resolved.
“However, expectations of March production growth picking up may cap some upside,” the trader said.
Palm fell 16% last week after top producer Indonesia abandoned volume curbs on exports. The removal of the export restrictions would lift global palm oil supply, which may in turn curb international crude palm oil prices, analysts have said.
On Monday, Malaysia maintained its April export tax for crude palm oil at 8%, a circular on the Malaysian Palm Oil Board website showed.
Dalian’s most-active soyoil contract rose 1.18%, while its palm oil contract gained 2.24%. Soyoil prices on the Chicago Board of Trade rose 0.85%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may retest a support at 5,606 ringgit per tonne, a break below which could cause a fall into 5,384-5,512 ringgit range, Reuters technical analyst Wang Tao said.
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