KUALA LUMPUR: Malaysian palm oil futures jumped as much as 4.5% on Tuesday, their biggest percentage gain in nearly a month, as jitters over the fallout from the Russia-Ukraine crisis spurred concerns over the global supply of vegetable oils and other commodities.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange climbed 218 ringgit, or 3.83%, to 5,910 ringgit ($1,385.71) a tonne.
Oil futures extended gains as the United States and Europe planned new sanctions to punish Moscow over alleged war crimes by Russian troops in Ukraine, adding to concerns about supply disruptions and making palm a more attractive option for biodiesel feedstock.
Chicago soybean futures also rose on uncertain global supplies, after consultancy Strategie Grains on Monday said that a halt to Ukrainian vegetable oil production and exports may continue until June.
This raised hopes that European nations will turn to palm oil as an alternative to sunflower and rapeseed oils.
“Rising inflation and the ongoing war (in Ukraine) have not brought commodity prices to peak levels, which gives room for further upward movement, especially in the energy and agri-commodity sectors,” said Mohsin Mohammad, director at Selangor-based cooking oil exporter Sarafiah Natural Resources.
In Malaysia, exports during April 1-5 fell 45% to 107,980 tonnes from the same week in March, cargo surveyor Intertek Testing Services said.
Demand for palm oil is expected to pick up in May and June when prices move downwards, but that might lead to a shortfall at destinations due to the month of Ramadan, he said.
Production in Malaysia is expected to pick up in the coming months as the weather improves.
Rapeseed farmers in India are holding back from selling to oilseed processors despite record harvest in the hopes that prices will rally further, which could force the world’s biggest importer of edible oils to increase imports of palm oil and soyoil. Soyoil prices on the Chicago Board of Trade rose 0.9% after a 1.6% gain overnight. The Dalian exchange was closed for a public holiday.
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