Palm oil prices rise 2% on stronger crude and rival vegetable oils

Malaysian palm oil futures rose 2% on September 1, extending gains for a second consecutive session. The November contract on Bursa Malaysia Derivatives gained 98 ringgit by the midday break to 4,992 ringgit ($1,238) per ton.

The market was supported by a sharp rise in rival vegetable oils. Chicago soyoil futures gained 2.33%, while on the Dalian exchange, soyoil rose 1.01% and palm oil added 1.07%.

Higher crude oil prices provided additional support amid renewed tensions between the US and Iran and concerns over possible supply disruptions from the Middle East. Stronger crude prices make palm oil more competitive as a biodiesel feedstock. The widening discount of palm oil to gasoil also supported prices.

Meanwhile, the market largely shrugged off weaker Malaysian export data. According to Intertek Testing Services, Malaysia’s exports of palm oil products fell 14.9% in August from July. At the same time, there has been no significant decline in production.

Indonesia set its September crude palm oil reference price at $1,007.51 per ton. The market is also watching India, where below-average rainfall is forecast for September following a rainfall deficit in August, raising concerns over crop yields.

Tags: futures, prices, Malaysia, palm oil