Palm oil futures rise on gains in rival oils, ringgit weakness

JAKARTA: Malaysian palm oil futures surged on Wednesday, underpinned by strength in rival edible oils in the Dalian and Chicago markets and a weaker ringgit.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 45 ringgit, or 1.13%, at 4,035 ringgit ($994.82) a metric ton by the close.

“Bursa Malaysia CPO opened marginally higher, tracking spread movements against rival oilseeds,” a Kuala Lumpur-based trader said.

Dalian’s most-active soyoil contract rose 0.73%, while its palm oil contract was up 0.66%. Soyoil prices on the Chicago Board of Trade gained 0.67%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. The Malaysian ringgit, the contract currency of trade, eased 0.3% against the U.S. dollar, making palm oil cheaper for foreign currency holders.

Indonesia’s President Prabowo Subianto on Wednesday said that his government may seize an additional 4 million to 5 million hectares (12 million acres) of palm oil plantations this year, on top of 4.1 million hectares seized last year.

Analysts said that in combination with Indonesia’s ambitious biodiesel plans, the seizures could put even more upward pressure on global prices by disrupting production.