KUALA LUMPUR: Malaysian palm oil futures climbed to a six-week high in evening trade on Tuesday, charting a third session of gains in four, tracking overnight strength in US soyoil and crude oil prices.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 1.3 per cent at 2,477 ringgit ($624.64) a tonne at the end of the trading day for its largest percentage gain since May 14. The market had hit an intraday peak of 2,485 ringgit, its highest since April 9. Trading volume stood at 39,505 lots of 25 tonnes each by the close.
“Soyoil is up, and crude oil is trading at three-year highs,” said one futures trader in Kuala Lumpur, adding that this encouraged more production of palm-based biodiesel.
Palm oil prices are affected by movements in crude oil because it is used as feedstock to produce biodiesel. Crude oil prices rose on Tuesday on concerns that Venezuela’s output could drop further after a disputed presidential election and potential US sanctions on the Opec member. Another trader said that expectations of lower palm oil production in May also supported benchmark prices. Data from the Malaysian Palm Oil Board (MPOB) had showed that April output in the Southeast Asian country dipped by 1pc to 1.56 million tonnes from a month earlier but was still the highest April level since 2015.
Published in Dawn, May 23rd, 2018