SINGAPORE: Malaysian palm oil futures rose on Tuesday, driven by robust imports by China and signs of strong demand, though three-month low crude oil prices weighed on the market.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange rose 45 ringgit, or 1.2%, to 3,765 ringgit ($804.49) a metric ton at closing.
“The supply of soyoil increased due to hot and warm weather expected in western and central growing areas of Brazil over the next 10 days. Additionally, demand for soyoil has surged, with China placing more orders,” said Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand and Co.
Malaysian palm oil declines on rising supply outlook
China imported 5.16 million metric tons of soybeans in October, customs data showed on Tuesday, a 25% surge from a year earlier but lower than analysts’ expectations.
China booked its largest single-day U.S. soybean purchase in three months on Tuesday, traders said, offering hope after overseas sales of the 2023 harvest fell behind the normal pace.
Chicago soybean futures traded at a two-month high on Wednesday. Elevated soybean prices translate into increased costs for soyoil, a product derived from soybeans.
Soyoil prices on the Chicago Board of Trade rose 0.5%.
Dalian’s most-active soyoil contract was up 0.4%, while its palm oil contract was up 0.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices struggled on Wednesday after sliding to their lowest levels in over three months in the previous session, weighed down by concerns over waning demand in the world’s top oil consumers.
Weaker crude oil prices make palm oil a less attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, last weakened 0.3%, making the commodity more attractive for foreign currency holders.
Malaysia, the world’s second-largest producer of palm oil, launched on Wednesday a system to facilitate management of transactional data along the supply chain.
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