Palm hits 7-month closing high on Indonesia’s biodiesel plans, strong Dalian oils

Malaysian palm oil futures notched a seven-month closing high on Thursday, driven by strength in rival Dalian oils and Indonesia’s biodiesel plans, while profit-taking is expected ahead of the Malaysia Palm Oil Board’s (MPOB) monthly data release.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange ended up 49 ringgit, or 1.08 per cent, at 4,594 ringgit (US$1,090.18) a metric ton – the highest close since March 7.

The contract logged gains for a third consecutive session.

The palm oil market rallied to price in bullish developments, including Indonesia’s B50 biodiesel blend mandate and higher opening prices at China’s Dalian exchange, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

However, he said the rally is now vulnerable without fresh catalysts.

“Traders are likely to engage in position squaring ahead of the MPOB’s upcoming demand and supply data, while demand too has begun to soften in response to higher prices, creating a potential headwind for the market in the near term,” he added.

Indonesia is forging ahead with its plan to make biodiesel containing 50 per cent palm oil-based biofuel, or B50, mandatory in 2026 in a bid to lower gasoil imports.

Dalian’s most-active soyoil contract rose 2.69 per cent, while its palm oil contract climbed 4.13 per cent. Soyoil prices on the Chicago Board of Trade were down 0.06 per cent.

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

Trading resumed in Chinese markets after the National Day holiday from October 1 to 8.

Oil prices were little changed as investors weighed a ceasefire deal in Gaza that could ease tensions in the Middle East against stalled peace talks in Ukraine that could sustain sanctions on Russia and curb its exports.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, remained unchanged against the U.S dollar.

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