Palm inches higher on stronger exports, lower output

KUALA LUMPUR: Malaysian palm oil futures closed higher on Wednesday, after falling in the previous session, driven by stronger export demand and a decline in May output.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 11 ringgit, or 0.24%, to reach 4,539 ringgit ($1,116.61) a metric ton at close.

Crude palm oil prices rose on stronger export estimates and the latest Malaysian Palm Oil Board (MPOB) report showing a month-on-month decrease in production, which are price-supportive in the near term, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Malaysia’s palm oil stocks rose for a second consecutive month in May, as a continued drop in exports outpaced a decline in output, data from MPOB showed.

Cargo surveyors estimated that exports of Malaysian palm oil products for June 1 to 10 rose between 3.5% and 4.9% from a month earlier.

Dalian’s most-active soyoil contract fell 0.05%, while its palm oil contract shed 0.13%. Soyoil prices on the Chicago Board of Trade were down 0.01%.

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

Oil prices were steady, as renewed U.S.-Iran hostilities muddied direction, though a forecast U.S. stock draw offered support.

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

The ringgit, palm’s currency of trade, weakened 0.22% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Meanwhile, Indonesian trade ministry officials faced a barrage of questions from exporters of palm oil, coal and ferro-alloys worried about the impact of a controversial new export control plan aimed at extracting more profit from the country’s natural resources.