Palm oil mirrors the strength of its Chicago rival; crude provides support

Malaysian palm futures closed Monday higher than they had done in a week, following gains made by Chicago edible oils. Meanwhile, advances?in energy complex?also added support.

The benchmark?palm-oil contract for May delivery at Bursa Malaysia's Derivatives Exchange rose 104 ringgit or 2.57% to 4,146 Ringgit ($1,056.57) per metric ton.

The price of CPO futures on the Bursa Malaysia exchange opened higher today, following the price spreads for rival oilseeds, according to a Kuala Lumpur-based trader. He added that the gains in energy were also supporting the sentiment as "supply risk concerns intensify amid the escalating Middle East tensions, which threaten one of the most important?energy corridors? in the world."

Dalian's palm oil contract grew 1.62%, while the most active soyoil contract increased 0.41%. Soyoil traded on the Chicago Board of Trade rose 2.55%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the?movements? of edible?oils that are competing with it.

The price of oil jumped 9% Monday, after retaliatory Iranian strikes disrupted shipping through the Strait of Hormuz in response to the bombings by Israel and the United States at the weekend that killed Iran's Supreme Leader Ali Khamenei.

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

A regulation issued by the Finance Ministry showed that Indonesia had increased its crude palm oil exports tax to 12.5% from 10%. Officials said the move was to fund its mandate for biodiesel blend.

Intertek Testing Services, a cargo surveyor, reported that exports of Malaysian palm oil products dropped 21.5% from January to February. Exports, according to AmSpec Agri Malaysia an independent inspection company, fell by 25.5%.

Statistics Bureau data released on Monday showed that Indonesia exported 2.24 million metric tons of crude and refined palm oil in January, an increase of 77.07% compared to the same period last year. The shipments were valued at $2.29 Billion. $1 = 3.9240 Ringgit (Reporting and editing by Sumana Nidy and Diti Pjara; Reporting by Bernadette Cristina and Dewi?Kurniawati)

(source: Reuters)