Palm oil rises for a second straight session following crude oil

Malaysian palm oil futures rose for a second consecutive session on September 15, supported by further gains in crude oil prices. The November contract on Bursa Malaysia Derivatives closed at 4,883 ringgit/t ($1,196/t), up 0.68% on the day.

The market was supported by a more than 2% rise in crude oil prices following attacks on Saudi Arabia’s energy infrastructure and the shutdown of the East-West pipeline. Higher crude oil prices improve the competitiveness of palm oil as a feedstock for biodiesel production.

Additional support comes from expectations of tighter supply next year due to Indonesia’s B50 biodiesel mandate and the potential negative impact of El Niño on palm oil production.

At the same time, export demand for Malaysian palm oil weakened. Cargo surveyors estimated that exports in the first half of September fell by 17.8–25.6% compared with the same period of August. Meanwhile, India increased palm oil imports by 7% m/m in August to 782.8 thsd tons.

Malaysia also raised its October crude palm oil reference price to 4,452.66 ringgit/t, while the export duty will remain at the maximum 10% rate. A 0.21% weakening of the ringgit against the US dollar also supported prices by making Malaysian palm oil cheaper for foreign buyers.

Tags: prices, Crude palm oil, Malaysia, palm oil, crude oil