JAKARTA: Malaysian palm oil futures closed higher on Tuesday, tracking sharp gains in crude, while weaker Malaysian production prospects and a falling ringgit gave further boost.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 24 ringgit, or 0.54 percent, to 4,497 ringgit (USD1,134.17) a metric ton at the close.
“The futures opened gap higher following sharp gains in crude oil prices from the early lows, weaker Malaysian palm oil production prospect for May month and weaker Malaysian ringgit,” said Anilkumar Bagani, commodity research head at Mumbai-based brokerage Sunvin Group.
The futures market will be closed for Eid al-Adha on Wednesday.
Dalian’s most-active soyoil contract dropped 0.46 percent, while its palm oil contract lost 0.07 percent. Soyoil prices at the Chicago Board of Trade were down 0.35 percent.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
According to inspection firms AmSpec Agri Malaysia and Intertek Testing Services, Malaysian palm oil exports for May 1–25 fell 18 percent and 14.5 percent, respectively, from April 1-25 levels.
Brent crude oil rose 3 percent on Tuesday after the US military carried out strikes in Iran, adding to uncertainty over whether a deal will be imminently reached to end the war and open up shipping flows through the Strait of Hormuz.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.38 percent against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.
In March, Indonesia exported 2.17 million metric tons of palm oil products, down from 2.88 million metric tons in the year-ago period, according to data from the Indonesian Palm Oil Association GAPKI.
Indonesia’s finance minister said on Tuesday that Wilmar International Limited and the Musim Mas Group are among the palm oil companies now being probed for suspected “under-invoicing” of exports.
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