Palm oil outperforms rival Chicago soyoil and crude

Malaysian palm oil futures rose Monday, following the stronger soyoil on the Chicago market. A jump in crude prices was also supportive.

By midday, the benchmark palm 'oil 'contract for September delivery at the Bursa Derivatives exchange was up 28 ringgit or 0.62% to 4,541 Ringgit ($1,113.54) per metric ton.

A Kuala Lumpur based trader stated that "Support for stronger crude oil and Chicago soy oil is expected underpin the market's?sentiment".

Dalian's palm oil contract, which is the most active contract in Dalian, fell 0.36%. Chicago Board of Trade soyoil prices were up by?1.1%.

Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oils market. Prices of oil rose over 4% on Monday, as the Strait of Hormuz remains under threat with both the U.S.A. and Iran declaring new military strikes.

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

The ringgit (palm's trade currency) fell 0.27% in relation to the dollar. This made the commodity "cheaper" for buyers who hold foreign currencies. The Malaysian Palm Oil Board reported that the stock of palm oil products reached a record high in June. This was due to an increase in production which outpaced demand. Cargo surveyors estimate that exports of Malaysian palm oils products from July 1-10 increased between 1.6% and 5.1 % compared to a month ago. An official from the energy ministry said that Indonesia needs between 16.7 and 18 million kilolitres (or FAME) of fatty acid methyl ester for its recently launched B50 biodiesel. Technical analyst Wang Tao believes that palm?oil could test support at 4,477 Ringgit per metric ton. A break below this level would open the door for 4,441 Ringgit.

(source: Reuters)