Palm oil gains over 1% due to soyoil and crude oil strength
The price of Malaysian palm oil futures increased by more than 1% Wednesday, boosted by increases in crude oil and soyoil prices which prompted traders to close out short positions.
At midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange gained 60 ringgit or 1.34% to 4,530 Ringgit ($1,074.22) per metric ton, the highest level since August 18.
A Kuala Lumpur based trader reported that the overnight strength of soyoil, crude oil and palm oil futures lifted them higher today.
The trader stated that "the December contract broke over the psychological level 4,500 ringgit. This prompted a wave short covering and renewed buying interest."
Oil prices increased as investors brushed aside fears of oversupply, digesting a previous decision by OPEC+ that production would be limited next month.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
Indonesia's energy minister revealed that the country is pushing ahead with its plan for biodiesel that contains 50% palm oil biofuel (B50) to be mandatory by 2026, in an effort to reduce gasoil imports.
The Chicago Board of Trade saw a rise of 0.33% in the price of soyoil. Dalian Commodity Exchange will be closed on October 1-8 due to public holidays.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.
Palm's trade currency, the ringgit (the palm equivalent of the dollar), has fallen by 0.12%, making it cheaper for buyers with foreign currencies.
(source: Reuters)