Malaysian palm oil futures rose on Monday

Palm oil prices rose amid escalating tensions between Iran and Israel, fueling concerns about supply disruptions from the Middle East. Despite the gains this session, Nomura expects palm oil prices to decline slightly this week due to concerns about future supply increases, forecasting a drop to 4,500 ringgit per tonne by June 11. However, if the conflict in the Middle East escalates, palm oil prices could rise to 4,600 ringgit per tonne, analysts note.

Malaysian palm oil futures rose on Monday after falling for two consecutive sessions, driven by an expected decline in May production, but concerns over Indonesia’s mandatory use of B50 biodiesel and its export policies limited gains.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 19 ringgit, or 0.42%, to 4,573 ringgit (US$1,123.59) per metric tonne at the close of trading.

The market rose on expectations of a larger-than-expected decline in Malaysian palm oil production in May, a weaker ringgit, and a recovery in energy prices, said Anilkumar Bagani, head of commodity research at Sunvin Group.

The Malaysian Palm Oil Council is expected to release its monthly supply and demand data on June 10.

“A recovery in Chicago soybean futures also helped support prices,” Bagani said.

However, he added that ongoing uncertainty over Indonesia’s mandatory 50% palm biodiesel blending rate, or B50, and the prospect of aggressive palm oil selling in the Indonesian market before the new export system is fully implemented could hinder a recovery in Malaysian palm oil prices.

Soybean oil prices on the Chicago Mercantile Exchange rose 0.38%. The most active soybean oil contract in Dalian fell 0.82%, while the palm oil contract in Dalian fell 0.49%.

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

Oil prices rose more than 4% as renewed Israeli strikes on Iran and new attacks on Lebanon dampened hopes for a quick end to the countrywide war.

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

The ringgit weakened 1.12% against the dollar, making the commodity cheaper for buyers holding foreign currency.

Tags: prices, palm oil