Malaysian palm oil futures rose more than 2% on Tuesday

Malaysian palm oil futures rose more than 2% on Tuesday ahead of a public holiday, breaking a two-day losing streak as the upcoming implementation of Indonesia’s B50 biodiesel program bolstered the market.

The benchmark FCPO3 palm oil contract for September delivery rose 93 ringgit, or 2.07%, on the Bursa Malaysia Derivatives Exchange, reaching 4,578 ringgit (US$1,126) per metric tonne at the close of trading. The Bursa Malaysia Derivatives Exchange will be closed on Wednesday for a public holiday.

The potential introduction of Indonesia’s B50 biodiesel program is supporting short-term sentiment, and an overnight rise in soybean oil prices further supported the market, said David Ng, a trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Indonesia will begin introducing ethanol-blended gasoline and tighten biodiesel content requirements to 50% on July 1.

The most actively traded soybean oil contract in Dalian rose 0.24%, while the palm oil contract rose 1.27%. Soybean oil prices on the Chicago Mercantile Exchange fell 0.78%.

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

Oil prices fell to new three-month lows as markets weighed the prospects for resuming shipments through the Strait of Hormuz amid weakening physical demand and scant details of a preliminary agreement to end the war with Iran.

Lower oil prices make palm oil a less attractive feedstock option for biodiesel production.

The ringgit weakened 0.42% against the dollar, making the commodity cheaper for buyers with foreign currency.

According to a circular published on the Malaysian Palm Oil Council website, Malaysia lowered its July reference price for crude palm oil to a level that maintains the export duty at 10%.

According to cargo appraisers, Malaysian palm oil exports increased by 9.6% to 23.8% between June 1 and June 15.

Tags: prices, palm oil