Palm oil prices rose on Wednesday

Palm oil prices rose, supported by positive sentiment following the launch of Indonesia’s mandatory B50 biodiesel program, said David Ng, a trader at Kuala Lumpur-based Iceberg X. This program requires the use of a 50% palm oil-based blend. Ng said improved export performance also supported market sentiment. Ng forecasts prices to hold above 4,500 ringgit per tonne, with resistance at 4,680 ringgit per tonne.

Malaysian palm oil futures closed higher on Wednesday after falling in the previous session, supported by a weaker ringgit, although weaker crude oil and competing edible oil prices limited gains.

The benchmark FCPO3 palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 11 ringgit, or 0.24%, to 4,557 ringgit (US$1,113.64) per metric ton at the close of trading.

The market was previously supported by a recovery in prices of rival soybean oil during the morning Asian session and a slight weakening of the ringgit, a Kuala Lumpur trader reported.

The ringgit weakened 0.24% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Soybean oil prices on the Chicago Mercantile Exchange fell 0.66%. The most active soybean oil contract, the Dalian contract, fell 0.32%, while the palm oil contract fell 0.59%.

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

Oil prices fell more than 1% as talks between Iran and the US aimed at reaching a final agreement to end the war continued, and the market awaited data from the US on inventory drawdowns.

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

According to a Trade Ministry decree, Indonesia set the reference price for crude palm oil for July at $1,000.90 per ton.

On Wednesday, the country will begin implementing a national program mandating the use of B50 fuel, a blend of 50% palm oil-based diesel and 50% conventional diesel, as part of its efforts to achieve energy independence. However, analysts say falling oil prices and rising palm oil prices threaten its viability.

Tags: prices, palm oil