Palm extends its rally for third session as it tracks rivals and higher crude

The price of Malaysian palm oil futures rose for the third consecutive session on Tuesday. They settled at their highest level in nearly four weeks. This was due to gains in edible oils from the 'Dalian and Chicago market, as well as a rise in crude prices.

The benchmark contract for palm oil delivery in May on the Bursa Derivatives exchange rose 39 ringgit or 0.94% to 4,186 Ringgit ($1,061.63) per metric ton.

A Kuala Lumpur based trader stated that "Bursa CPO future opened higher due to firmer price margins in competing oilseeds." He also added that gains in energy amid ongoing Israeli and U.S. attacks on Iran were also supporting prices.

Dalian's palm oil contract, which is the most active contract in Dalian, gained?1.6%. Chicago Board of Trade Soy Oil rose 1.34%.

As palm oil competes to gain a share in the global vegetable oils market, it tracks the price movement of its rival edible oils.

A survey revealed on Tuesday that Malaysian palm oil stocks are expected to drop for the second consecutive month, and reach a four-month high, as seasonal production declines will outweigh slower exports.

Five dealers report that India's imports of palm oil rose by 10.1% to reach a six-month record in February, due to the widening price discount compared to other oils. This led refiners to increase their purchases and reduce imports.

According to data from Intertek Testing Services, a cargo surveyor and AmSpec Agri Malaysia, an independent inspection company, exports of palm oil products from Malaysia decreased between 21.5%?and 25.5% in February.

Brent crude oil futures reached their highest level since July 2024, as the U.S. and Israel conflict escalated with Iran. Also, threats to shipping through the Strait of Hormuz heightened concerns about supply disruptions in the Middle East.

Palm oil is a better option as a feedstock for biodiesel due to the stronger crude oil futures.

Technical analyst Wang Tao stated that palm oil could test a support level of 4,121 ringgit per metric ton. A break below this support would trigger a drop into the range 4,078-4.098 ringgit. ($1 = 3.9430 ringgit)

(source: Reuters)