Malaysian palm oil prices rise as the market takes into account El Nino's impact on production

The price of Malaysian palm oil futures increased for the second consecutive session on Tuesday, as traders analyzed the potential impact of El Nino on production following the monthly industry data.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was up 21 Ringgit or 0.44% at 4,744 Ringgit ($1,159.90).

"After-MPOB data), the market adjusts to the impact El Nino has had on production. Demand remains a major focus with the hope that August consumption will remain strong," Paramalingam Supramaniam said, a director of brokerage firm Pelindung Bestari.

He said that traders are waiting for the U.S. Department of Agriculture report due on August 12 to provide further direction. The sentiment was cautious with buyers taking a defensive position and buying on dips.

Dalian's most active palm oil contract grew by 0.56%, but its soyoil contract was flat. Chicago Board of Trade soyoil prices were down by 0.06%.

As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors the price movement of their competitors.

Malaysian Palm Oil Board data showed that the country's palm oil stockpiles rose to a five-month high of 2.63 million metric tonnes in July, an increase of 3.32% on a month basis. This was due to production volumes exceeding export demand, according to Monday's figures.

AmSpec Agri Malaysia - an independent inspection company - reported that exports of Malaysian palm oil products rose by 14.8% between August 1-10, while Intertek Testing Services - a testing service based in the United States – said they increased by 2.6%.

After President Donald Trump demanded compensation from the U.S. for damages incurred, oil prices remained steady on Tuesday at a higher level than they had been in the previous week.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

(source: Reuters)