Palm oil prices rose on Thursday
Palm oil prices rose amid the escalating conflict in the Middle East and rising oil prices. Renewed attacks on key energy infrastructure in the Middle East have driven up oil prices, making palm-based biodiesel more attractive, according to a note from Kenanga Futures. Palm oil prices also tracked rising soybean oil prices amid expectations that the Trump administration will soon approve the US biofuel blending policy, the note notes. The upcoming Hari Raya Aidilfitri holiday could also stimulate palm oil demand and support prices, the note adds.
Malaysian palm oil futures rose more than 1% on Thursday, extending their third consecutive week of gains. The price increase was driven by higher Dalian oil prices, while profit-taking limited gains amid the holiday-shortened week.
The benchmark June palm oil contract FCPO1 on the Bursa Malaysia Derivatives Exchange rose 84 ringgit, or 1.86%, to 4,612 ringgit (US$1,171.75) per metric tonne at the close.
The rise in palm oil prices was driven by higher Dalian oil prices, but profit-taking began ahead of the extended Eid holiday, a Kuala Lumpur-based trader said.
The market will be closed on Friday for a public holiday, with trading resuming on March 24.
“Some market participants are also staying on the sidelines due to the long weekend, limiting further gains,” the trader added.
The most-active Dalian soybean oil contract rose 0.12%, while the palm oil contract CPO1 fell 0.43%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.4%.
Palm oil prices are tracking the price movements of competing edible oils as they compete for share in the global vegetable oil market.
Oil prices jumped, with benchmark Brent crude rising to its highest level in more than a week, exceeding $115 per barrel, after Iran attacked energy facilities in the Middle East following Israel’s strike on the South Pars gas field, marking a major escalation of the war.
Stronger crude oil makes palm oil a more attractive biodiesel feedstock option.
The Malaysian Palm Oil Council forecasts that crude palm oil prices will remain above 4,450 ringgit ($1,130) per metric ton in the near term due to rising energy prices and uncertainty in the Middle East. Malaysian fertilizer producers are suspending new orders as supply chain disruptions and raw material shortages due to the conflict are driving up raw material prices, threatening higher production costs for palm oil producers.
The ringgit weakened 0.59% against the dollar, making the commodity cheaper for buyers with foreign currency.
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