Palm Oil Futures Rise in Malaysia on Bargain Hunting

KUALA LUMPUR: On Wednesday, Malaysian palm oil futures saw gains, buoyed by bargain-seeking activities and positive market sentiment for edible oils.

The benchmark palm oil contract, scheduled for July delivery on the Bursa Malaysia Derivatives Exchange, experienced an increase of 69 ringgit, equivalent to 1.74%. It settled at 4,035 ringgit ($919.55) per metric ton at the session’s close, having previously surged by over 2% during the day.

Market Analyst Comments

Darren Lim, a commodities strategist at Phillip Nova, noted that the futures market is undergoing a technical correction, receiving support from both bargain hunting and more robust sentiment within the edible oil and energy sectors.

He further suggested that the growing price difference compared to soybean oil could stimulate demand from markets that are sensitive to price fluctuations in the near future.

Reports indicate that India has amplified its palm oil acquisitions following a five-month period of reduced activity. A price adjustment has rendered palm oil more affordable than its competitor, soyoil, prompting refiners to place new orders aimed at replenishing their reserves, according to sources at Reuters.

On the Dalian Commodity Exchange, the most actively traded soyoil contract increased by 1.19%, while the palm oil contract saw a rise of 2.01%. Furthermore, soyoil prices on the Chicago Board of Trade (CBOT) registered a gain of 0.62%.

Market Dynamics
  • Palm oil prices are closely related to the price variations of competing edible oils, due to its position in the global vegetable oils market.
  • Data indicates that Indonesia’s exports of both crude and refined palm oil declined by approximately 2% on a monthly basis in March, attributed to increased domestic consumption during Ramadan. Nevertheless, March shipments reached a four-year peak.

The ringgit, which is the currency used for palm oil transactions, depreciated by 0.27% against the U.S. dollar, making the commodity more cost-effective for international buyers.

Crude oil prices experienced an increase of more than 1% on Wednesday, extending gains from the previous session. This increase occurred as investors assessed the impact of recent U.S. sanctions on Iran, a decrease in U.S. crude inventories, and a somewhat conciliatory stance from President Donald Trump regarding the Federal Reserve.

Elevated crude oil prices enhance palm oil’s appeal as a biodiesel feedstock.