Palm oil closes higher, snap 3 weeks of losses

JAKARTA: Malaysian palm oil futures rose on Friday on some bargain buying after a steep decline following the announcement of a new Indonesian export monitoring system earlier this week.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed higher by 27 ringgit, or 0.61%, at 4,485 ringgit ($1,131.15) a metric ton.

The futures booked a 1.49% weekly gain, their first increase after three straight weeks of losses.

“The futures were seen trading higher today on some bargain buying and upward correction of the recent steep decline as the market has been waiting for clarity over the new Indonesian export monitoring system,” said Anilkumar Bagani, commodity research head at Mumbai-based brokerage Sunvin Group.

The market is concerned that Indonesia may start pushing more palm oil for export until the new system is in place, capping upward momentum in prices, he said.

Dalian’s most-active soyoil contract fell 0.85%, while its palm oil contract shed 1.7%. Soyoil prices on the Chicago Board of Trade were up 0.8%.

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

Meanwhile, oil prices climbed on Friday as investors doubted the prospect of a breakthrough in U.S.-Iran peace talks, but remained on track for a weekly loss.

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

The Malaysian palm oil industry is concerned that Indonesia’s plan to centralise exports of key commodities, including palm oil, could temporarily disrupt export flows and weigh on market sentiment during the transition period, Malaysian Palm Oil Board officials said on Thursday.

Cargo surveyors estimated that exports of Malaysian palm oil products for May 1 to May 20 fell between 13.9% and 20.5% from a month earlier.