JAKARTA: Malaysian palm oil futures reversed losses and closed higher on Wednesday after the prospect of stocks rising for the third consecutive month in May pressured the market earlier in the day.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 16 ringgit, or 0.41%, to 3,950 ringgit ($930.73) a metric ton at the close.
“Palm oil prices seen rebounding in anticipation of a strong demand from India after the import duty reduction last week,” said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.
India’s palm oil imports in May surged to a six-month high, as lower inventories and the tropical oil’s discount to rival soyoil and sunflower oil prompted refiners to increase purchases.
Dalian’s most-active soyoil contract rose 0.13%, while its palm oil contract declined 0.73%. Soyoil prices on the Chicago Board of Trade gained 0.51%.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
India’s May palm oil imports jump to six-month high
Malaysia’s palm oil inventories are projected to climb for the third consecutive month in May, driven by a modest recovery in production despite robust export demand, a Reuters survey showed on Wednesday.
Independent inspector AmSpec Agri Malaysia estimated exports of Malaysian palm oil products to have risen 13.2% in May, while cargo surveyor Intertek Testing Services projected a 17.9% jump.
Oil prices held steady on Wednesday as concerns around the OPEC+ groups’ next output increase were offset by Canadiansupply pressures due to wildfires there, while global trade tensions continue to linger.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.09% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
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