Palm rises 1% on strong demand, olein; high stocks caps gains

KUALA LUMPUR: Malaysian palm oil futures climbed 1% on Monday, rebounding from the previous session’s losses, as firmer Dalian palm olein prices and strong export data lent support, though record-high September stockpiles capped gains.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 46 ringgit, or 1%, to 4,638 ringgit ($1,136.49) a metric ton at the close. The contract fell 1.48% in the previous session.

Crude palm oil prices traded higher, supported by strength in Dalian palm olein, but upside potential is capped by expectations of higher palm oil end-stocks, a Kuala Lumpur-based trader said.

Malaysia’s palm oil stockpiles in September surged to 3.51 million metric tons as production hit an all-time high, surpassing market expectations and reaching levels that were once thought impossible.

Production climbed for a fourth straight month in September, jumping 16.48% to 2.12 million tons and eclipsing the previous high set in August 2015, while exports fell for a second straight month, sliding 12.13% to 1.12 million tons.

Cargo surveyors estimated that exports of Malaysian palm oil products for October 1-10 rose between 33.5% and 37.7% from the month earlier.

Dalian’s most-active soyoil contract shed 0.3%, while its palm oil contract added 0.23%. Soyoil prices on the Chicago Board of Trade were up 0.41%.

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

Oil prices oscillated as the market considered possible further supplies after US President Donald Trump hailed fresh Russian diesel exports against supply-constricting signals after major attacks on Saudi Arabia.

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

The ringgit palm’s currency of trade, strengthened 0.05% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.