Palm oil ends up higher than crude oil and competing edible oils

Malaysian palm futures closed higher Monday, 'following the strength of crude oil prices. Gains in rival edible oils prices at the Dalian and Chicago markets also provided additional support.

At the close, the benchmark 'palm oil contract' for July delivery on the Bursa Derivatives Exchange rose 47 ringgit or 1.06% to 4,497 Ringgit ($1,138.19).

The futures prices are slightly higher due to the stronger crude oil price. As tensions have increased in the Middle East, shipping has been reduced in and out the Gulf. This is helping the prices recover some of last Friday’s steep losses, said Kang Wei Cheng, an analyst based in Singapore from StoneX.

Dalian's markets, which had suffered losses on Friday, have recovered, adding to the positive sentiment. The Chicago soyoil complex is mixed. Soyoil has recovered due to oil/meal spread and higher crude oil prices.

Prices of oil jumped by more than 6% on Monday morning, amid fears that the ceasefire agreement between the United States of America and Iran might collapse following the seizure of an Iranian cargo vessel and the largely stopped traffic through the Strait of Hormuz.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

Dalian's palm oil contract grew by 0.39%, while the most active soyoil contract increased by 0.17%. Prices for soyoil on the Chicago Board of Trade rose 1.24%.

As palm oil competes to gain a share in the global vegetable oils industry, it 'tracks' the price movements of competing edible oils.

Exports of Malaysian palm oil products fell by 25.6% between April 1 and 20 compared with March 1 to 20, according to AmSpec Agri Malaysia.

The palm ringgit's currency of trade has weakened by 0.03% against dollars, making it slightly cheaper for buyers who hold foreign currencies.

(source: Reuters)