KUALA LUMPUR: Malaysian palm oil futures gained more than 1 percent on Wednesday, driven by stronger soyoil and crude oil prices that prompted traders to cover short positions.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 76 ringgit, or 1.7 percent, to 4,546 ringgit (USD1,078.79) a metric ton, the highest closing price since August 18.
The overnight strength in soyoil and crude oil lifted crude palm oil futures higher today, a Kuala Lumpur-based trader said.
“The December contract broke above the psychological level of 4,500 ringgit, prompting a wave of short covering and fresh buying interest,” the trader said.
Oil prices climbed by over 1 percent, helped by a smaller than expected output hike from producer group OPEC+ next month, though concerns about potential oversupply capped further gains.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Meanwhile Indonesia is forging ahead with its plan to make biodiesel containing 50 percent palm oil-based biofuel, or B50, mandatory in 2026 in a bid to lower gasoil imports, its energy minister said.
Soyoil prices on the Chicago Board of Trade were up 0.72 percent. The Dalian Commodity Exchange is closed from October 1 to 8 on account of public holidays.
Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
The ringgit, palm’s currency of trade, weakened 0.05 percent against the dollar, making the commodity cheaper for buyers holding foreign currencies.
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