Palm oil closes higher as Chicago soyoil strength and crude oil rally boost prices

Malaysian palm futures closed higher on Wednesday, supported both by the stronger soyoil market in Chicago and rising crude oil prices.

At the close, the benchmark 'palm oil contract' for May delivery at the?Bursa?Malaysia Derivatives Exchange rose 71 ringgit (1.6%), to 4,499 Ringgit ($1,149.76). The contract had dropped to 4,395 Ringgit earlier in day.

Soyoil traded on the Chicago Board of Trade increased by 3.11%. Dalian's most active soyoil contract gained 0.68%, after falling 0.19% in the morning. Its palm oil contract also added 0.51% following a 0.25% drop.

Palm oil monitors the price movements of other edible oils in order to compete for a market share on the global vegetable oils?market. Crude oil prices rose on Wednesday, as investors questioned whether the 'International Energy Agency’s' reported?plan to release record amounts of oil reserves would be able to offset any supply shocks resulting from the U.S./Israel conflict with Iran.

Palm oil is a better option as a biodiesel source because crude oil futures are stronger. AmSpec Agri Malaysia, an independent inspection company, reported that exports of palm oil products from Malaysia for the period March 1-10 increased by 45.3% in comparison to February 1-10. Intertek Testing Services reported a 37.9% increase. The 'rising prices of vegetable oils and freight costs are driving Indian buyers to expedite shipments, as they worry that the Middle East conflict could delay deliveries of soyoil or sunflower oil. GAPKI, Indonesia's 'leading producers' organisation, said that new orders for palm oil export have cooled after the U.S./Israeli war on Iran has increased logistics and insurance costs.

The Malaysian Ringgit, the contract’s currency of trade, has strengthened by 0.18% against U.S. Dollar, making palm oils more expensive for holders of foreign currencies.

(source: Reuters)