KUALA LUMPUR: Malaysian palm oil futures extended gains to a third consecutive session on Wednesday to end at their highest closing price in nearly three weeks, propped up by stronger related oils, although expectations of higher production may limit upside movements.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 67 ringgit, or 1.47%, to 4,626 ringgit ($1,171.14) a metric ton at closing.
The contract extended the 2.45% gain recorded over the previous two sessions.
“Market sentiment is likely to remain firm, underpinned by strength in Dalian RBD palm olein and Chicago soybean oil futures. However, price movements may stay volatile amid uncertainty surrounding U.S.–Iran peace talks,” a Kuala Lumpur-based trader said.
READ MORE: Palm oil rises on firmer rival oils
Oil prices jumped on Wednesday with Brent trading above $100 a barrel, erasing earlier losses following reports of gunfire attacks on at least three container ships in the Strait of Hormuz.
Higher crude oil prices made palm oil a more attractive option for biodiesel.
As of April 13, Indonesia consumed 3.9 million kilolitres of palm-based biodiesel year-to-date under its biodiesel blending mandate, an energy ministry official said, as preparations got underway to increase the blending rate further.
Dalian’s most-active soyoil contract rose 2.07%, while its palm oil contract surged 1.2%. Soyoil prices on the Chicago Board of Trade were trading slightly higher 0.63%.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Palm oil is expected to test a resistance at 4,639 ringgit per metric ton. A break above could lead to a gain into the 4,693-4,760 ringgit range, Reuters technical analyst Wang Tao said.
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