Palm oil up

17 Jun, 2015

Malaysian palm oil futures rose for the first time in three sessions on Tuesday as the tropical oil tracked gains in comparative soy markets, but was weighed down by doubts on the effectiveness of Indonesia's levies to boost its biodiesel consumption. The September palm oil contract on the Bursa Malaysia Derivatives exchange inched up 1.1 percent to 2,290 ringgit ($610.83) per tonne by the day's close.
After a strong start in June which lifted the contract to over three-month highs of 2,362 ringgit, prices are now stuck in range-bound trade as they struggle to find a footing amid prospects of dwindling demand and a volatile ringgit currency. "The market is still range-bound, between 2,250 and 2,300 ringgit," said a trader with a foreign commodities brokerage in Malaysia, adding that firmness in US and Chinese soyoil markets in early Asian trade provided some support.
Total traded volume was 38,062 lots of 25 tonnes each, higher than the usual 35,000 lots. Analysts say that Indonesia's new implementation date of July 1 for its palm export levies may end the uncertainty for exporters. "Our view is that if the government can successfully utilise the funds and enforce the 15 percent biodiesel mandate, this would provide a major positive boost to CPO prices as it could soak up to 5.5 million kilolitres of biodiesel," said Ivy Ng, regional head of plantations research at CIMB Investment Bank.
Indonesia's crude palm oil output likely rose 4 percent to 2.774 million tonnes in May to its highest level since at least August, a Reuters survey showed, due to a seasonally high production month and as many plantations mature. In vegetable oil markets, the US July soyoil contract rose 0.9 percent by 1004 GMT, while the most active September soybean oil contract on the Dalian Commodity Exchange gained 1.4 percent.

Read Comments