Palm settles higher despite disappointing biodiesel targets, weaker rival oils

KUALA LUMPUR: Malaysian palm oil futures reversed course to settle slightly higher on Wednesday, shrugging off pressure from a slower-than-expected expansion of the country’s biodiesel mandate and weakness in rival oils.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 8 ringgit, or 0.18%, to 4474 ringgit ($1,132.66) a metric ton at the close. The contract declined 1.95% in the previous session.

Crude palm oil futures traded on a weaker note following the easing of the vegetable oil markets, particularly soybean oil, said Anilkumar Bagani, commodity research head at Sunvin Group, a Mumbai-based brokerage.

“Additionally, Malaysia’s phased increase in its biodiesel blend mandate, moving first to B12 and then to B15, failed to inspire market confidence, as traders had anticipated a move to B20 or higher,” he added.

Malaysia pledged to boost the use of biodiesel to help cope with fuel supply constraints as its economy comes under increasing strain from the Middle East crisis.

Dalian’s most-active soyoil contract fell 0.41%, while its palm oil contract shed 0.65%. Soyoil prices on the Chicago Board of Trade were up 0.8%.

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

Cargo surveyors estimated that exports of Malaysian palm oil products for April 1-15 fell between 34.2% and 34.7% month-on-month.

The ringgit, palm’s currency of trade, weakened 0.03% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.