Palm oil gains on bargain buying
Malaysian palm oil futures rose 0.47% on Tuesday, closing at 4,922 ringgit ($1,100.87) per metric ton, driven by bargain buying and a recovery in the Dalian palm olein market. The rebound was fueled by tight supply ahead of Indonesia’s B40 biodiesel mandate and Ramadan holidays. However, India’s expected reduced demand and a weaker crude oil market may lead to a market correction. Palm oil prices follow movements in rival oils, like soyoil. Cargo surveyors are set to release Malaysia’s palm oil export estimates for Nov. 1-20.
KUALA LUMPUR: Malaysian palm oil futures closed higher on Tuesday, supported by bargain buying and a recovery in the Dalian palm olein market.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange ended 23 ringgit, or 0.47% higher, at 4,922 ringgit ($1,100.87) a metric ton. The contract fell 3.71% in the previous session.
The palm market was seen trading up on bargain buying and due to a bullish recovery in Chinese palm olein futures during Asian hours, said Anilkumar Bagani, research head at Sunvin Group.
“The bullish rebound is also due to energy prices and overall tightness in the palm oil supply situation ahead of Indonesia’s B40 biodiesel mandate and the Ramadan holidays,” Bagani said.
Last week, Indonesia’s government reaffirmed to lawmakers a plan to implement a 40% mandatory biodiesel mix with palm oil-based fuel, known as B40, in January 2025.
Separately, traders are anticipating a market correction, and with the approaching winter season, demand from India is expected to decrease, a Mumbai-based trader said.
“Given that India is price-sensitive as well, exports are projected to decline in November,” the trader added.
Dalian’s most-active soyoil contract rose 0.46%, while its palm oil contract shed 0.26%. Soyoil prices on the Chicago Board of Trade were down 0.37%.
Palm oil tracks the price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
Cargo surveyors are expected to release their estimates for Malaysian palm oil exports for the Nov. 1-20 period on Wednesday.
Crude oil slipped pressured by the restart of production at Norway’s Johan Sverdrup oilfield, although investor caution arising from fears of an escalation in the Russia-Ukraine war limited the decline.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.16% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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