Malaysian palm oil futures rose slightly by midday on Thursday

Palm oil futures ended higher, tracking oil prices. Prices remain below previous peaks despite strong gains in plantation stocks, indicating potential for further gains, AmInvestment Bank said in a note. It also suggests the commodity is not yet overbought, with the recent break above the RM4,600 resistance level signaling the start of an uptrend, the bank added.

Malaysian palm oil futures rose slightly on Thursday, partially recouping losses from the previous session, as cut-price buying resumed following a recovery in oil prices.

However, growth was limited by pressure from weaker competitors from Dalian, as well as uncertainty over the timing of biodiesel’s inclusion in the Indonesian fuel mix.

The benchmark FCPO1 palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose RM56 or 1.22% to close at RM4,642 ($1,166.33) per metric tonne, after falling more than 3% in the previous session.

Uncertainty around the timing of Indonesia’s introduction of the B50 index – whether it covers only subsidized businesses or both subsidized and non-subsidized ones – has weighed on the market, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.

Indonesia’s Energy Ministry has issued a ministerial decree setting a timeline for a program to include biofuels in fuel mixes, an official said, as the country seeks to achieve energy transition and self-sufficiency goals.

“In addition, weakness in Chinese palm oil, soybean oil and rapeseed oil futures has also slowed the recovery (of palm oil prices),” Bagani said.

Soybean oil prices on the Chicago Mercantile Exchange rose 0.44%, while the most actively traded Dalian soybean oil contract fell 0.68% and the palm oil contract fell 0.52%.

Palm oil prices are tracking those of rival edible oils as it battles for share of the global vegetable oils market.

Oil prices rose amid doubts over a fragile two-week truce in the Middle East, raising concerns about continued restrictions on energy flows through the crucial Strait of Hormuz.

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

The ringgit weakened 0.15% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

According to Reuters technical analyst Wang Tao, the palm oil price could test the resistance level of RM4,644 per tonne, a break of which could lead to a rise to RM4,696.

Tags: prices, palm oil