Malaysian palm oil futures closed higher on Tuesday

Malaysian palm oil futures closed higher on Tuesday, following a sharp rise in oil prices, which was also helped by a deteriorating Malaysian production outlook and a weakening ringgit.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 24 ringgit, or 0.54%, to close at 4,497 ringgit (US$1,134.17) per metric tonne.

“Futures opened with a gap up on the back of a sharp rise in oil prices from early lows, a deteriorating Malaysian palm oil production outlook for May, and a weakening Malaysian ringgit,” said Anilkumar Bagani, head of commodity research at Mumbai-based brokerage Sunvin Group.

The futures market will be closed on Wednesday for the Eid al-Adha holiday.

The most active soybean oil contract in Dalian fell 0.46%, while the palm oil contract CPO1 lost 0.07%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.35%.

Palm oil prices are tracking those of competing edible oils as it competes for share in the global vegetable oil market.

According to inspection companies AmSpec Agri Malaysia and Intertek Testing Services, Malaysia’s palm oil exports from May 1 to 25 fell by 18% and 14.5%, respectively, compared to April 1 to 25.

Brent crude oil prices rose 3% on Tuesday following US military strikes on Iran, heightening uncertainty about the imminent achievement of an agreement to end the war and reopen shipping through the Strait of Hormuz.

Strengthening oil futures makes palm oil a more attractive biodiesel feedstock option.

The ringgit weakened 0.38% against the dollar, making the commodity slightly cheaper for buyers holding foreign currency.

In March, Indonesia exported 2.17 million metric tons of palm oil products, down from 2.88 million metric tons in the same period last year, according to the Indonesian Palm Oil Producers Association (GAPKI).

The Indonesian Finance Minister said on Tuesday that Wilmar International Limited and Musim Mas Group are among palm oil companies currently under investigation for allegedly “undervaluing” exports.

Tags: prices, palm oil