Palm gains from El Nino risk, biodiesel prospects

The price of Malaysian palm oil futures rose on Thursday as traders factored in multiple factors, including El Nino risk, increased demand for biodiesel, and the Middle East conflict. The benchmark palm oil contract on the Bursa Derivatives exchange for October delivery gained 82 Ringgit or 1.77% to 4,704 Ringgit ($1,151.81) per metric ton at midday.

Funds are pushing for an impressive breakout, which is supported by El Nino risks, lower production expectations in Q4 of 2026 and in H1 2027, and biodiesel prospects in the Middle East amid?tensions.

Dalian's palm oil contract grew?2.63%, while the most active soyoil contract increased 0.72%. Chicago Board of Trade soyoil prices increased by 0.84%.

Palm oil follows the price movement of rival edible oils as it competes to gain a share in the global vegetable oils markets. India's edible oils imports will increase between July and Octember as slower soybean and Rapeseed crushing reduces domestic supply ahead of the peak demand for festive foods.

Rajesh Patel is the managing partner of GGN Research, a trader. He said that imports are expected to increase by up to 54% in July compared to the previous month, to 750,000 tons. Malaysian crude palm oils are expected to trade between 4,400 and 4,650 ringgit per metric ton ($1,076 to $1,137) in August, according to the Malaysian Palm Oil Council. On Thursday, oil prices rose more than 1.5% and reached their highest level in over six weeks. Palm oil is more appealing as a biodiesel feedstock because crude oil futures are stronger. Technical analyst Wang Tao believes that palm oil FCPOc3 could rise to a price of between 4,690 and 4,760 ringgit for a metric ton as long as it stays within the rising channel.

(source: Reuters)