JAKARTA: Malaysian palm oil futures extended gains to a third session on Thursday, as top producer Indonesia imposed mandatory domestic sales and high energy rates boosted prices of the vegetable oil.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 2.10% to 5,441 ringgit ($1,297.02) per tonne by closing time.
The contract rose as much as 3.17% during the session to hit an all-time high of 5,500 ringgit a tonne before cooling towards the closing level. The world’s top palm oil producer Indonesia on Thursday announced all cooking oil producers will be required to sell 20% of their planned export to the domestic market.
The Malaysian palm contract rose on the announcement but came off the highs as the portion set for the domestic market was smaller than the anticipated 25%, a palm oil trader said. Prior to the Indonesian policy announcement, palm oil was also supported by rising tension between Russia and Ukraine, which had pulled crude oil, and in turn edible oil, prices up.
Dalian’s palm oil contract gained 2.87% and its most-active soyoil contract rose 2.23%. On the Chicago Board of Trade, soyoil prices were up 0.36%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
In the energy market, oil prices fell as investors cashed in profits from the 2% gains in the previous session after the US Federal Reserve indicated an interest rate hike in March, leading to correction in surging energy markets. Crude oil prices affect palm oil, as it is an option for biodiesel feedstock.
The Fed’s signal also weakened emerging market currencies, including the Malaysian ringgit, which helped palm prices go higher. Weaker ringgit makes palm more attractive for foreign buyers.
Comments
Comments are closed.