Malaysian palm oil futures closed higher on Wednesday

Malaysian palm oil futures closed higher on Wednesday after falling in the previous session, driven by stronger export demand and lower May production.

According to cargo assessment firm AmSpec Agri, Malaysia’s palm oil exports for the period June 1-10 increased by 4.9% compared to the previous month, reaching 376,971 metric tons. According to the National Meteorological Service, the probability of an El Niño event by the end of July increased to 82%. Citi analysts predict that an El Niño event will boost crude palm oil prices by 5%. Crude palm oil prices could also be supported in the second half of the year by various global biodiesel adoption programs, they add.

The benchmark FCPO3 palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 11 ringgit, or 0.24%, to close at 4,539 ringgit (US$1,116.61) per metric tonne.

Crude palm oil prices rose on the back of more optimistic export forecasts and the latest report from the Malaysian Palm Oil Board (MPOB), which showed a decline in production compared to the previous month. This is supporting prices in the short term, said David Ng, a trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

According to MPOB data, Malaysian palm oil inventories rose for the second consecutive month in May, as continued declines in exports outpaced production cuts.

According to cargo experts, Malaysian palm oil exports increased by 3.5-4.9% from June 1 to 10 compared to the previous month.

The most actively traded Dalian soybean oil contract fell 0.05%, while the palm oil contract declined 0.13%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.01%.

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

Oil prices remained stable as the resumption of US-Iran hostilities complicated the situation somewhat, although a projected decline in the US stock market provided support.

Higher oil futures prices make palm oil a more attractive feedstock option for biodiesel production.

The ringgit weakened 0.22% against the dollar, making the commodity cheaper for buyers holding foreign currency.

Tags: prices, palm oil