Palm oil prices closed higher on Wednesday

Palm oil prices closed higher, following rising soybean oil prices, said David Ng, a trader at Iceberg X in Kuala Lumpur. He said the recent rise in palm oil prices could ultimately lead to a decline in demand. Ng expects prices to find support at 4,400 ringgit per tonne and face resistance at 4,550 ringgit per tonne.

Malaysian palm oil futures rose slightly on Wednesday, succumbing to pressure from the country’s slower-than-expected expansion of its biodiesel program and weakening prices of competing oils.

The benchmark FCPO1 palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 8 ringgit, or 0.18%, to 4,474 ringgit (US$1,132.66) per metric tonne at the close. The contract had fallen 1.95% in the previous session.

Crude palm oil futures traded weaker following softening conditions in vegetable oil markets, particularly soybean oil, said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage.

“Furthermore, the gradual increase in the proportion of biodiesel in Malaysia’s fuel mix, first to B12 and then to B15, did not inspire market confidence, as traders were expecting a shift to B20 or higher,” he added.

Malaysia has pledged to increase its use of biodiesel to cope with fuel supply constraints as its economy comes under increasing pressure from the Middle East crisis.

The most-active Dalian soybean oil contract fell 0.41%, while the CPO1 palm oil contract fell 0.65%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.8%.

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

Freight experts estimate that Malaysian palm oil exports from April 1 to 15 fell by 34.2% to 34.7% compared to the previous month.

The ringgit weakened 0.03% against the dollar, making the commodity slightly cheaper for buyers holding foreign currency.

Tags: palm oil, prices