Palm oil prices rise despite higher production and stock levels

Malaysian palm-oil futures closed higher on Tuesday after recovering from earlier losses, despite expectations of increased production and inventories.

At the close, the benchmark contract for palm oil delivery in August on the Bursa Derivatives exchange gained 35 ringgit (0.91%) to $3,868 ringgit (913.34 USD). The contract has been rising for three sessions in a row.

A Kuala Lumpur based trader stated that prices are lower due to increased stock, while production will be the same as last month.

Buyers are expecting lower prices due to the current export numbers and the possibility that stocks will rise. Chicago soyoil has also dropped from its highs, and Dalian does not show any signs of strength," said the trader.

On June 10, the Malaysian Palm Oil Board will release its monthly data on supply and demand.

Exports of Malaysian Palm Oil Products between May 1-25 grew between 7.3% to 11.6% compared to the same period last month.

Dalian's palm oil contract, which is the most active contract, gained 0.8%. Chicago Board of Trade soyoil prices rose 1.01%.

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

The oil prices remained unchanged as easing concerns about a trade war offset expectations that OPEC+ would decide to increase production at a later meeting this week.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency has weakened by 0.47% in relation to the dollar. This makes the commodity slightly more affordable for buyers who hold foreign currencies. ($1 = 4.2350 ringgit)

(source: Reuters)