Palm oil up on Chicago soyoil gains
JAKARTA: Malaysian palm oil futures rose for a third session, with the benchmark September contract up 4.36% at 4,093 ringgit/tonne. Gains were driven by stronger Chicago soyoil after the US proposed higher biofuel blending mandates, and rising crude oil prices. Export demand also strengthened, with June 1–15 shipments up over 17%, according to AmSpec Agri.
JAKARTA: Malaysian palm oil futures closed higher for the third straight session on Monday, tracking gains in Chicago soyoil after the US proposed higher biofuels blending volumes, and elevated crude oil prices.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained 171 ringgit, or 4.36%, to 4,093 ringgit ($965.79) a metric ton at the close.
US President Donald Trump’s administration on Friday proposed increasing the amount of biofuels that oil refiners must blend into the nation’s fuel mix over the next two years, driven by a surge in biomass-based diesel mandates.
It pushed Chicago soyoil futures to their highest level in nearly 18 months on Monday, after rising more than 6% on Friday. Soyoil on the Chicago Board of Trade (CBOT) gained 5.39%. Dalian’s most-active soyoil contract was up 2.45%, while its palm oil contract rose 3.76%. Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market. Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova, said the edible oils market tracked gains in crude oil since Friday when Israel bombed Iran.
“Supply disruption fears lead to heightened risk premiums,” said Lim. Higher energy prices increases both palm oil production costs and potential demand for biofuels.
The biofuel sector acts as an alternative energy source to crude oil-derived fuels, Lim added. Oil prices edged 0.7% lower on Monday after a 7% surge on Friday, as renewed military strikes by Israel and Iran over the weekend left oil production and export facilities unaffected. Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.
Cargo surveyor Intertek Testing Services said Exports of Malaysian palm oil products for June 1-15 rose 26.3% compared to May 1 – 15, while according to independent inspection company AmSpec Agri Malaysia it rose 17.8%.
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Source : Business Recorder
