SINGAPORE: Malaysian palm oil futures rose 1% on Thursday, trading near a seven-week high scaled in the previous session, as higher crude oil prices made palm a more attractive option for biodiesel feedstock.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 44 ringgit, or 1.06%, to 4,190 ringgit ($945.61) by the midday break.
The contract had hit its highest since Jan. 4 on Wednesday, before paring most of the gains on profit-booking.
Palm oil gains for second week on weaker ringgit
Palm futures traded higher, showing resilience after being struck by profit-taking in the previous session, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Lingering concerns about tight supply from top producer Indonesia and weaker Malaysian production outlook have supported the market over the past two weeks.
However, there are no fresh fundamentals to drive the market higher except for feel-good sentiment, raising doubts about the sustainability of high prices, Varqa said.
Oil prices rose slightly in thin Asian trade, after a sharp loss in the previous session fed by mounting concerns that more aggressive interest rate hikes by central banks could pressure economic growth and fuel demand.
Malaysia maintained its March export tax for crude palm oil at 8% and lowered the reference price, a circular on the Malaysian Palm Oil Board website showed on Wednesday.
Dalian’s most active soyoil contract lost 0.18%, while its palm oil contract gained 0.27%. Soyoil prices on the Chicago Board of Trade were up 0.02%.
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 4,155 ringgit per tonne, a break below which could open the way towards a range of 4,039-4,083 ringgit, Reuters technical analyst Wang Tao said.
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