Palm oil gains more than Chicago soyoil

Malaysian palm oil futures rose for the third consecutive session on Monday. They followed gains in Chicago soybean oil after the U.S. proposed increased biofuels blend volumes and elevated crude oil price.

The benchmark palm-oil contract for September delivery at Bursa Malaysia's Derivatives exchange gained 171 Ringgit or 4.36% to $4,093 Ringgit ($965.79) per metric ton.

The U.S. administration of President Donald Trump proposed on Friday that oil refiners increase the amount biofuels they must mix into the nation's gasoline over the next two-years, due to a surge in mandates for biomass-based diesel.

After a rise of more than 6% Friday, it pushed Chicago Soyoil Futures to their highest levels in almost 18 months on Sunday.

Chicago Board of Trade Soyoil gained 5.39%. Dalian's soyoil contract with the highest volume was up by 2.45% while palm oil rose by 3.76%.

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

Darren Lim of Phillip Nova in Singapore, a commodities strategist, said that the edible oil market has tracked crude oil gains since Israel's bombing of Iran on Friday.

"Fears of supply disruption lead to higher risk premiums," Lim said.

Palm oil production costs increase as well as the demand for biofuels.

Lim said that biofuels are an alternative to fuels derived from crude oil.

After a 7% increase on Friday, oil prices fell 0.7% on Monday as new military strikes by Israel over the weekend did not affect oil production or export facilities.

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

Intertek Testing Services, a cargo surveyor, said that exports of palm oil products from Malaysia for the period June 1-15 were up 26.3% over May 1-15. AmSpec Agri Malaysia, an independent inspection company reported a 17.8% increase. $1 = 4.2380 Ringgit (Reporting and editing by Harikrishnan Nair, Vijay Kishore).

(source: Reuters)