Palm closes highest in 7-weeks on strength of soyoil and crude oil
The price of Malaysian palm oil futures rose by more than 1% Wednesday due to higher soyoil prices and crude oil, which prompted traders cover their short positions.
The benchmark palm-oil contract for December delivery at the Bursa Derivatives Exchange in Malaysia gained 76 Ringgit or 1.7% to 4,546 Ringgit ($1,078.79), the highest closing price ever since August 18.
A Kuala Lumpur trader reported that the overnight strength of soyoil, crude oil and palm oil pushed crude palm oil futures up today.
The trader stated that "the December contract broke over the psychological level 4,500 ringgit. This prompted a wave short covering and renewed buying interest."
Oil prices rose by more than 1% in response to a lower-than-expected increase in output from the producer group OPEC+. However, concerns over potential oversupply capped any further gains.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
Indonesia's energy minister revealed that the country is pushing ahead with its plan for biodiesel to be mandatory by 2026, containing 50% palm-oil-based biofuel. This will help to reduce gasoil imports.
The Chicago Board of Trade saw a rise of 0.72% in the price of soyoil. Dalian Commodity Exchange will be closed on October 1-8 due to public holidays.
As palm oil competes to gain a share in the global vegetable oil market, it tracks price changes of competing edible oils.
The dollar has weakened by 0.05%, making palm cheaper for foreign currency buyers. Reporting by Ashley Tang, Editing by Rashmi aich and Ronojoy Mazumdar.
(source: Reuters)