Palm oil climbs near one-month high as crude and Dalian oils gain
Malaysian palm futures rose on Monday, reaching their highest level since?nearly one month. This was largely due to gains in crude oil, stronger Dalian vegetable oil, and renewed El Nino fears.
At close, the benchmark palm oil contract on Bursa Derivatives Exchange for October delivery was up 45 Ringgit or 0.98% at 4,642 Ringgit ($1,134.96).
Anilkumar bagani, commodity head at Sunvin Group and the head of research for commodities, said that BMD CPO futures had opened higher after a bullish rally on energy prices as well as CBOT Soy oil futures. Bagani added that "talks about a super-strong El Nino" have gained traction again, helping palm oil prices to move higher.
Dalian's palm oil contract, which is the most active contract in Dalian, rose by 1.56%. Prices of soyoil on the Chicago Board of Trade rose by 0.26%.
As it competes to gain a share in the global vegetable oil market, palm oil monitors the 'price movements' of its rival edible oils.
Brent oil prices rose by 2% on Monday to over $90 per barrel, as the escalating U.S. - Iran hostilities in Middle East limited oil shipments across the Strait of Hormuz. However, the gains were reversed after comments from Iran's Foreign Ministry that negotiations with the U.S. can be pursued on the basis of national interests.
Palm oil is more attractive as a biodiesel feedstock due to the stronger crude oil futures.
AmSpec Agri Malaysia reported on Monday that exports of Malaysian palm oil products fell by 0.9% for the period July 1-20, while Intertek?Testing Service said they rose 4.1%.
Malaysia's meteorological department said that El Nino is strengthening and the country will experience record-breaking temperatures in 2019. This has stoked concerns about a possible decrease in palm oil production. The 'U.S. Climate Prediction Center reports that?El Nino's strength has increased over the last month. It is expected to continue intensifying through 2026.
(source: Reuters)
