Palm climbs on Mideast uncertainty, weak supply outlook

KUALA LUMPUR: Malaysian palm oil futures rose on Thursday, after declining in the previous session, buoyed by uncertainty around the outcome of the Middle East conflict and expectations of a drop in March output.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 25 ringgit, or 0.52%, to 4,794 ringgit ($1,187.81) a metric ton at the close.

The palm oil market remains uneasy amid uncertainty over ongoing negotiations, with mixed signals from Washington and Tehran leaving traders unsure whether the Middle East conflict will ease or escalate, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

On the supply side, production figures show only a marginal rise, pointing to March-end stocks of about 2 million-2.2 million tons, a level that underpins the market as output trends gradually but steadily lower, Supramaniam said.

The Malaysian Palm Oil Board is expected to release its March supply and demand figures on April 10.

Dalian’s most-active soyoil contract fell 0.48%, while its palm oil contract shed 0.28%. Soyoil prices on the Chicago Board of Trade gained 1.62%.

Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Oil prices climbed nearly 7% after President Donald Trump said the U.S. would continue attacks on Iran, stoking fears of prolonged disruptions to oil supply.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, weakened 0.3% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Indonesia’s palm oil association said biodiesel feedstock demand was expected to reach about 15 million metric tons this year, up 2 million tons year-on-year, after factoring in the B50 palm oil-based biodiesel programme.