SINGAPORE: Malaysian palm oil futures extended gains on Tuesday amid hot weather in key producer Malaysia, with strong export data and firmer rival oil prices lending support.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed up 25 ringgit, or 0.63%, at 3,969 ringgit ($830.68) a metric ton.
Bad weather in Malaysia has contributed to higher prices, said Mitesh Saiya, trading manager at Kantilal Laxmichand & Co, adding that “good” palm oil exports lifted sentiment.
Malaysia’s meterological agency issued Level 1 hot weather alerts in over 10 areas on Monday. Hot weather negatively affects palm yields.
Palm oil exports from top producer Indonesia are expected to recover in April, after shipments in March and February fell below the monthly average over the past year, the trade ministry said on Monday.
Dalian’s most-active soyoil contract climbed 2.09%, while its palm oil contract increased 1.06%. Soyoil prices on the Chicago Board of Trade rose 0.33%.
Palm oil gains on poor weather, exports recovery and stronger rivals
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Crude oil prices gained after stronger economic data out of Europe, as investors also weighed the potential fallout from any fresh U.S. sanctions on Iran’s oil exports with tensions remaining high in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Malaysia maintained its export tax for crude palm oil at 8% for May and raised its reference price.
Indonesia’s palm oil planter Astra Agro Lestari allocated up to 700 billion rupiah ($43.1 million) this year to replant up to 5,000 hectares of its maturing plantation to maintain output.
Palm may rise this week towards the resistance levels of RM3,990-4,000 per ton this week, with support at RM3,840-3,860 per ton, LSEG said in a report on Monday.
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