Malaysian palm oil futures up more than 2pct on expectation of improving demand

Malaysian palm oil futures rose for the fourth straight session on Monday, after data from the industry regulator showed a decline in the country’s stocks and expectations of improving demand added to market’s bullish sentiment.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange gained 91 ringgit, or 2.02 per cent, to RM4,595 (US$1,028.65) a metric ton at the close.

Malaysia’s palm oil stocks fell more than expected in January to their lowest level in 21 months even as exports dropped and imports rose, due to a plunge in output, data from the Malaysian Palm Oil Board (MPOB) showed.

The stock figures revealed by MPOB was bullish, and assuming demand picks up momentum in February and March, it will certainly put more pressure on the end stocks, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

“Going forward production patterns will be the deciding factor for palm prices. Rains in East Malaysia have not been helpful too so prices will continue to remain defensive,” he said.

Dalian’s most-active soyoil contract rose 0.15 per cent, while its palm oil contract added 1.87 per cent. Soyoil prices on the Chicago Board of Trade eased 0.2 per cent.

Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Cargo surveyor Intertek Testing Services estimated that exports of Malaysian palm oil products during February 1-10 fell by 3.9 per cent while AmSpec Agri Malaysia reported a 6.4 per cent rise, compared with the same period a month ago.

Oil prices ticked higher, rebounding after declines last week, on concerns about a global trade war, as investors appeared to shrug off US president Donald Trump’s latest threat, this time on steel and aluminium imports.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

Tags: Malaysia, palm oil, futures, benchmark contract, soyoil