Palm oil rises to an 11-day high on stronger crude oil and rival vegetable oils

Malaysian palm oil futures climbed more than 1% on Tuesday, reaching their highest level in 11 days. The benchmark October contract on the Bursa Malaysia exchange gained 66 ringgit (1.43%) to 4,695 ringgit/ton ($1,146.8/ton), recovering losses recorded during the previous two trading sessions.

The market was supported by gains in crude oil prices and competing vegetable oils. On the Dalian Commodity Exchange, soyoil futures rose 0.32%, while palm oil futures added 0.23%. Chicago Board of Trade (CBOT) soyoil futures also advanced 0.56%.

Crude oil prices increased by more than 2% amid continued uncertainty over a diplomatic resolution to the U.S.-Iran conflict and ongoing disruptions to oil shipments through key maritime trade routes. Higher crude oil prices generally improve the competitiveness of palm oil as a biodiesel feedstock.

A slight weakening of the Malaysian ringgit against the U.S. dollar also made palm oil marginally cheaper for overseas buyers, supporting demand. However, market participants expect Malaysia’s palm oil inventories to rise to a five-month high in July, as production growth continues to outpace strong demand.

Meanwhile, official data showed that Indonesia exported 11.28 mln tons of crude and refined palm oil during January–June, up 2.5% from the same period a year earlier. Higher exports from the world’s largest palm oil supplier remain an important factor shaping the global vegetable oils market.

Tags: prices, palm oil