Palm oil prices rose sharply on Friday

According to Kenanga Futures analysts, in their note, the price increase was likely driven by the strength of competing oils and positive market sentiment amid ongoing tensions in the Middle East. Traders also expect a sharp decline in production due to recent floods, which could provide additional support for prices. However, Kenanga adds, potential profit-taking could limit the gains. The brokerage sees support for the May futures contract at 4,185 ringgit per tonne and resistance at 4,300 ringgit per tonne.

On Friday, Malaysian palm oil futures reached their highest level in four months and posted a weekly gain, supported by a stronger position in the Dalian edible oil market and a weaker ringgit.

The benchmark FCPO1 palm oil contract for May delivery on Bursa Malaysia rose 158 ringgit, or 3.76%, to close at 4,365 ringgit (US$1,107.31) per metric tonne.

The contract has risen 7.99% this week, driven by rising oil prices, and recorded its biggest weekly gain since the week of November 25, 2024.

“Palm oil futures on Bursa Malaysia opened with a gap up following a bullish rally in soybean oil, gasoil, and crude futures in Chicago on Thursday evening, as well as a strong rebound in Dalian palm olein and Zhengzhou rapeseed oil futures during Asian hours,” said Anilkumar Bagani, head of commodity research at Sunvin Group, a Mumbai-based brokerage. According to Bagani, palm oil is currently the cheapest compared to competitors such as soybean, rapeseed, and sunflower oils, trading almost in line with gasoil prices, increasing its attractiveness for new demand. He added that there are concerns about a reduction in oil supplies due to the conflict in the Middle East.

The most actively traded Dalian soybean oil contract rose 0.79%, while the palm oil contract rose 2.44%. The price of soybean oil on the Chicago Mercantile Exchange fell 0.12%.

Palm oil prices follow the price movements of competing edible oils as it fights for share in the global vegetable oil market.

The Malaysian ringgit, the currency used in the contract, weakened 0.05% against the US dollar, making palm oil cheaper for holders of foreign exchange reserves.

Tags: prices, palm oil