KUALA LUMPUR: Malaysian palm oil futures ended more than 2% higher on Friday, bouncing back to log a weekly gain, tracking stronger Chicago soyoil prices.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange rose 97 ringgit, or 2.26%, to 4,393 ringgit ($977.74) a metric ton at the close.
The contract gained 0.57% this week.
“Crude palm oil futures were seen trading higher on the back of a strong recovery in overnight Chicago soyoil and during Asian hours today,” said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.
Bagani, however, said the expectations of a drop in Indonesian palm oil reference price for February, uncertainty over the success of Indonesia’s B40 biodiesel mandate and lacklusture Dalian palm olein futures capped the gains.
Dalian’s most-active soyoil contract rose 0.88%, while its palm oil contract gained 0.21%. Soyoil prices on the Chicago Board of Trade were up 3.23%.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Palm oil ends lower on weak demand
Malaysia’s palm oil stocks declined for a third consecutive month, falling 6.91% to 1.71 million metric tons at the end of December, while crude palm oil production fell 8.3% and exports plunged 9.97%, data from the Malaysian Palm Oil Board showed on Friday.
Cargo surveyors estimated that Malaysian palm oil exports fell between 21.4% and 26.8% during the Jan. 1-10 period.
Oil prices rose and were on track for a third straight week of gains as traders focused on potential supply disruptions from sanctions, while icy conditions in parts of the United States and Europe are expected to drive up fuel demand.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.16% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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