Malaysian palm oil futures rose on Friday

Malaysian palm oil futures rose on Friday, supported by higher crude oil prices and a weaker ringgit.

However, weaker prices for competing vegetable oils on the Dalian Exchange limited gains during the session on Friday.

The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 16 ringgit, or 0.35%, to US$1,159.77 (US$1,157.68) per metric tonne at the close.

The contract is up 3.28% for the week.

Oil prices rose on Friday and for the week on fears of renewed military escalation in the Middle East.

Higher oil prices make palm oil more attractive as an alternative fuel source.

“Since the US attack on Iran, our palm oil futures have been highly dependent on oil prices, and as the Malaysian Palm Oil Producers Association (MPOC) has stated, palm oil futures will be supported until the war ends,” said a Kuala Lumpur-based trader.

According to the Malaysian Palm Oil Producers Association (MPOC), improving biodiesel economics, high oil prices, and the potential development of El Niño weather patterns are expected to help palm oil prices remain above 4,500 ringgit per tonne in the near term.

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

The most active Dalian soybean oil contract fell 1.04%, while the palm oil contract declined 0.37%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.53%.

Palm oil prices are tracking the price dynamics of competing edible oils, seeking to capture market share in the global vegetable oil market.

Technically, palm oil prices are expected to fall within a narrow range of 4,517-4,531 ringgit per tonne, having failed to break the 4,639 ringgit resistance level, according to Reuters technical analyst Wang Tao.

Tags: prices, palm oil