Palm oil prices rise on El Nino and supply squeeze worries
Malaysian palm oil climbed a little higher on Wednesday as traders considered the impact of El Nino, and tighter Indonesian supply under Indonesia's B50 mandate.
The benchmark 'palm oil contract' for a metric tonne of?October delivery? on the Bursa Derivatives Exchange rose 11 ringgit or 0.24% to 4,621 Ringgit ($1,131.77).
Anilkumar bagani, head of commodity research at Sunvin Group in Mumbai, said that the threat of El Nino, as well as a possible supply squeeze from Indonesian palm oil mandate B50, continued to support prices.
According to Energy Minister Bahlil Lahadalia, Indonesia's mandate for increasing the biodiesel mix to 50% palm oil from 40% will result in an increase of crude palm oil consumption from 15,2 million to 16.5 million metric tonnes.
Dalian's most-active palm oil contract declined?0.37%, while its soyoil contract declined 1.4%. Prices of soyoil on the Chicago Board of Trade fell by 0.25%.
As it competes to gain a share in the global vegetable oil market, palm oil closely tracks the price fluctuations of competing edible oils. Bagani of Sunvin pointed out that palm oils still trade at a discounted price to rival vegetable oil, which supports?demand for this commodity.
Industry officials on Wednesday said that India's edible oils imports are also expected to increase demand for palm oil between July and October, as the slowdown in soybean and rapeseed crushing will erode domestic supplies ahead of peak holiday demand.
On Wednesday, oil prices rose to levels not seen in six weeks due to growing concerns over disruptions of?key Middle Eastern?supply routes. Palm oil is more appealing as a biodiesel feedstock due to the stronger crude oil futures.
The Malaysian Palm Oil Council announced on Wednesday that Malaysian crude palm oils is expected to trade in the range of 4,400 to 4,650 ringgit ($1,076 to $1,137) a metric ton between August and September.
(source: Reuters)
