Palm oil prices rose on Monday

Prices are expected to remain relatively stable this week, as concerns about lower crude oil prices are offset by Indonesia’s mandatory use of B50 biodiesel, which requires a 50% blend of palm oil and diesel, Nomura analysts wrote in a note. Nomura expects palm oil prices to average around 4,500 ringgit per tonne, but could decline to 4,400 ringgit per tonne if exports weaken. The Bursa Malaysia derivatives contract for September delivery rose 70 ringgit to 4,550 ringgit per tonne.

Malaysian palm oil futures jumped more than 1% on Monday, snapping a two-day decline, as rising prices for competing edible oils offset pressure from weaker crude oil prices.

The benchmark FCPO3 palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 70 ringgit, or 1.56%, to 4,550 ringgit (US$1,114.65) per metric ton at the close of trading.

Strong performance in competing markets, which also rose more than 1%, provided positive support, according to a Kuala Lumpur-based trader.

The most actively traded Dalian soybean oil contract rose 1.03%, while the palm oil contract added 1.06%. Soybean oil prices on the Chicago Mercantile Exchange rose 1.93%.

Palm oil prices follow those of competing edible oils as it competes for share in the global vegetable oil market.

Crude ol prices fell after OPEC+ agreed to further increase production targets from August, and exports from key producers through the Strait of Hormuz are recovering, potentially increasing global supplies.

Lower crude oil prices make palm oil a less attractive option for biodiesel production.

The ringgit weakened 0.37% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

According to a Reuters poll, Malaysian palm oil inventories likely reached their highest level on record in June as production growth outpaced demand.

Tags: prices, palm oil