KUALA LUMPUR: Malaysian palm oil futures rose on Monday, recovering slightly from the previous session’s loss, as geopolitical jitters in the Middle East lifted crude oil prices and spurred buying interest in the oilseed.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was up 19 ringgit, or 0.42 percent, at 4,557 ringgit (USD1,146.99) a metric ton at the close. The contract declined 2.26 percent on Friday.
Renewed Middle East tensions reignited buying interest in the market, as traders added a risk premium back into prices following Friday’s sharp selloff, said Paramalingam Supramaniam, director at brokerage Pelindung Bestari.
However, demand constraints and better-than-expected supply will cap gains in the coming days, Supramaniam said. Cargo surveyors estimated that exports of Malaysian palm oil products for April 1-10 likely fell between 30.7 percent and 38.9 percent month-on-month.
Oil prices jumped back above USD100 a barrel as the US Navy prepared to block ships to and from Iran via the Strait of Hormuz, after Washington and Tehran failed to reach a deal to end the war. Malaysia’s palm oil inventories slid in March, down for a third consecutive month and hitting a seven-month low, as a surge in exports more than offset a modest increase in output.
Dalian’s most-active soyoil contract nudged 0.39 percent lower, while its palm oil contract shed 1.47 percent. Soyoil prices on the Chicago Board of Trade were up 1.33 percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. India’s palm oil imports in March dropped nearly 19 percent on-month and hit a three-month low after a rally in tropical oil prices, in line with energy markets, prompted refiners to hold back purchases, a trade body said.
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