Palm oil rises to more than seven-month high on supply tightness, demand optimism
SINGAPORE, March 6 (Reuters) -Malaysian palm oil futures rose for a second consecutive session to a more than seven-month high on Wednesday, on tight supply and optimism over palm demand, while higher rival oil prices also supported.
The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange rose 95 ringgit, or 2.38% to 4,081 ringgit ($862.79) a metric ton at closing, the highest close since July 25.
Palm oil output in Indonesia and Malaysia, which account for a bulk of global production, is likely to either rise marginally in 2024 or decline from last year’s level, as ageing plantations and a lack of expansion caps output, analysts said at an industry conference in Kuala Lumpur on Wednesday.
Global palm oil production declined between January and March, with stocks down by 1.2 million tons so far in the current quarter, Thomas Mielke, executive director of Hamburg-based forecaster Oil World, said.
The main picture for palm oil still remains bullish in the near term amid supply concerns and lower stocks in the first quarter, Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, said.
Ramadan, a month-long fasting event that lasts from March to April, could further tighten output, Supramaniam said.
On the demand side, traders are optimistic about palm oil demand during Ramadan and Eid al-Fitr, LSEG Commodities Research said in their March update.
Malaysia’s biodiesel production could rise to 1.8 million tons in 2024 if the government expands its 20% biodiesel mandatory programme to more areas, the Malaysian Biodiesel Association said on Tuesday.
Dalian’s most-active soyoil contract DBYcv1 increased 1.35%, while its palm oil contract DCPcv1 jumped 2.19%. Soyoil prices on the Chicago Board of Trade BOcv1 gained 0.78%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The Malaysian ringgit MYR=, palm’s currency of trade, strengthened 0.06% against the dollar.
($1 = 4.7300 ringgit)
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