Palm oil gains from Indonesia's biodiesel plan, and strong Dalian oils
Malaysian palm futures rose for the third session in a row on Thursday. This was due to strength in Dalian oils, a rival oil company, and Indonesia's plans to produce biodiesel. However, traders are expected take profits before the Malaysia Palm Oil Board releases its monthly data.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery had gained 26 ringgit or 0.57% to 4,571 Ringgit ($1,085.23) per metric ton.
Paramalingam Supramaniam of Selangor's brokerage Pelindung Bestari said that the palm oil market has rallied in response to recent bullish developments including Indonesia's mandate for B50 biodiesel and higher opening rates at China's Dalian Exchange.
He said that the rally was vulnerable now without new catalysts.
He added that traders are likely to take positions ahead of the MPOB data on demand and supply. Demand has also begun to soften as a result of higher prices. This could create a headwind in the short term.
Indonesia has accelerated its plans to make
biodiesel
In an effort to reduce gasoil imports, the government will make B50 (biofuel based on 50% palm oil) mandatory by 2026.
Dalian's palm oil contract, which is the most active contract in Dalian, grew 3.92% while soyoil rose 2.51%. Chicago Board of Trade soyoil prices were down by 0.27%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
After the National Day holidays from October 1-8, trading resumed on Chinese markets.
The oil prices dropped after Israel and Hamas reached an agreement on the first phase of the plan to end the Gaza war, which eased geopolitical tensions in the Middle East. Meanwhile, the strength of the U.S. Dollar weighed down on commodities.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's trade currency strengthened by 0.05% in relation to the dollar. This made the commodity more expensive for foreign buyers.
(source: Reuters)