Malaysian palm oil futures jumped more than 2% on Thursday, supported by overnight gains in US soyaoil on the Chicago Board of Trade (CBOT). The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed up 2.1% at 2,009 ringgit ($482.35) per tonne. Although the contract reversed Wednesday's 1.9% fall, it is still on track to post a weekly loss, currently down 0.9% on weaker soyaoil prices and concerns of slowing export demand.
Malaysian palm oil shipments dived more than 30% between June 1-10 versus the corresponding period last year. "Overnight gains in soya added strength to boost palm oil's market sentiment," said a Kuala Lumpur-based futures trader. Soyabeans had gained for a fourth consecutive session as forecasts of more rains in the US Midwest threatened to stall planting.
Meanwhile, the launch of a road test for biodiesel with 30% palm content in the world's top producer Indonesia also helped sentiment, the trader added. "If that exercise is effective, it will be good for the market. Anything that will absorb palm supply is good for the market." Indonesia started testing of B30 fuel in cars on Thursday as it gears up for its mandatory use in 2020.
In other related oils, the September soyaoil contract on the Dalian Commodity Exchange rose 0.2% and the Dalian September palm oil contract was up slightly. Palm oil prices are affected by movements in related edible oils, with which it competes for global market share.
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