Palm tracks gains in Dalian and Chicago rival oils, stronger crude

JAKARTA: Malaysian palm oil futures rose on Thursday, underpinned by gains in rival edible oils, higher crude oil prices and expectations of stronger biodiesel demand, following Indonesia’s move to speed up road testing for B50 blend.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained 42 ringgit, or 0.93%, to 4,541 ringgit ($1,157.24) a metric ton at the close, after rising to an intraday high of 4,628 ringgit.

“The futures are currently being governed by the crude oil situation; any massive upside in either Dalian, Chicago or crude, it will react,” a Kuala Lumpur-based trader said.

“The news that Indonesia is pushing forward the B50 implementations also provides support to the market,” the trader added.

Dalian’s most-active soyoil contract gained 1.46%, while its palm oil contract rose 2.43%. Soyoil on the Chicago Board of Trade added 0.79%.

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Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Oil prices rose sharply on Thursday as Iran stepped up attacks on oil and transport facilities across the Middle East, fuelling concerns of a prolonged conflict and potential disruptions to oil flows through the Strait of Hormuz.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

Indonesia is accelerating its road test for B50 biodiesel made with 50% palm oil and 50% conventional oil, in case it struggles with crude oil supply due to the Middle East conflict, its deputy energy minister said on Wednesday.

Meanwhile, Malaysia has raised its April crude palm oil reference price, a change that lifts the export duty to 9.5%, a circular on the Malaysian Palm Oil Board website showed on Thursday.

India’s palm oil imports in February rose about 11% from the previous month to 847,689 metric tons, a trade body said on Thursday.