Malaysian palm oil futures rose to their highest level in four weeks
According to David Ng, a trader at Iceberg X in Kuala Lumpur, crude palm oil prices have risen again, supported by stronger soybean oil and crude oil prices. Expectations of declining inventories are also supporting market sentiment, Ng said. He forecasts palm oil prices to hold above 4,600 ringgit per tonne, with resistance at 4,750 ringgit per tonne.
Malaysian palm oil futures rose to their highest in four weeks, up nearly 2% on Tuesday, amid optimism about Malaysia’s plans to introduce biodiesel.
The benchmark FCPO1 palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 88 ringgit, or 1.9%, to 4,710 ringgit (US$1,189.39) per metric ton, reaching its highest closing level since April 7.
Malaysia will begin producing biodiesel with 15% palm oil content, hence the name B15, in June to help lower diesel prices, the country’s deputy prime minister said on Monday.
The market believes that the successful implementation of B15 biodiesel in Malaysia will require about 1.5 million metric tons of crude palm oil per year, said Paramalingam Supramaniam, director of brokerage Pelindung Bestari.
Meanwhile, traders are awaiting April production data from the Malaysian Palm Oil Association, which is expected to provide an indication of production trends in the second quarter, Supramaniam said.
Soybean oil prices on the Chicago Mercantile Exchange rose 0.41%. The Dalian Commodity Exchange was closed for a holiday and will resume trading on May 6. Palm oil prices follow the price movements of competing edible oils as it fights for share in the global vegetable oil market.
Brent crude futures fell but held near $114 per barrel following renewed fighting in the Middle East, while investors monitored developments in the US-Israeli conflict with Iran.
Weaker oil futures make palm oil a less attractive option for biodiesel feedstock. The ringgit weakened 0.25% against the dollar, making the commodity slightly cheaper for buyers holding foreign currency.
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