Palm extends its gains due to strong soyoil demand, export demand and EU law delay
The price of Malaysian palm oils futures rose for the second session in a row on Thursday. This was due to the higher soyoil price, strong exports, and the extension of the European Union anti-deforestation law by another year.
The benchmark palm-oil contract for December delivery at Bursa Malaysia's Derivatives exchange gained 61 Ringgit or 1.39% to 4,440 Ringgit ($1,055.13) per metric ton.
David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn Bhd, said that the rise in crude palm oil futures was due to higher soyoil and export performances. Exports of Malaysian products containing palm oil for the period September 1-25 increased between 11.3% to 12.9%, according to cargo surveyors.
Ng said that the positive market mood was likely also a result of the European Union Deforestation Regulation being delayed for an additional year. The European Union announced on Tuesday that it would delay the launch of its anti-deforestation legislation for a second year. This will also postpone the import ban for commodities like palm oil, which are linked to forest destruction.
Dalian's palm oil contract grew by 1.59% while the most active soyoil contract increased by 1.19%. Chicago Board of Trade soyoil prices rose 0.98%.
Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oils markets. The oil prices in Asian trade eased on Thursday. They had risen to a seven-week-high in the previous session, but investors pulled their funds out of the market due to the uncertainty surrounding the supply-demand outlook.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm currency, the ringgit (a 0.07% decline) against the dollar made the commodity slightly more affordable for buyers who hold foreign currencies. The head of a trade body predicted that Indonesian palm oil exports will increase to the European Union in 2026. This is due to a bilateral trading pact, as well as the delay of the anti-deforestation laws.
(source: Reuters)
