Palm oil prices rise over 1% as bargain-buying and crude oil price rebound

Malaysian palm futures closed?more that 1% higher Thursday, recovering?some losses from the previous session, backed by bargain-buying amid a rebound in crude oil prices.

The gains were however, capped because of pressure from Dalian's weaker rival oils, and confusion about Indonesia's biodiesel blend timeline.

After a drop of more than 3% in the previous session, the benchmark palm oil contract on the Bursa Derivatives exchange for June delivery rose 56 ringgit or 1.22% to 4,642 Ringgit ($1,166.33).

Anilkumar bagani, head of commodity research at Sunvin Group in Mumbai, says that confusion over Indonesia's B50 timeline, which applies to both subsidised and non-subsidised companies, has weighed on the markets.

An official confirmed that Indonesia's Energy Ministry has released a ministerial order setting out the "timeline" for the implementation of its mandate to blend biofuels. The ministry is trying to achieve its energy self-sufficiency and transition targets.

Bagani added that "weaker Chinese palm olein futures, soyoil, and rapeseed have also slowed down the recovery" (in palm oil price).

Prices of soyoil on the Chicago Board of Trade rose by 0.58%. Dalian's top-active contract for soyoil fell by 0.68%. Its palm oil contract also dropped 0.52%.

As it competes to gain a share in the global vegetable oil market, palm oil follows the price movement of competing edible oils.

Oil prices rose after doubts about a fragile ceasefire in the Middle East lasting two weeks raised fears that energy flows through Strait of Hormuz, which is crucial to global energy supply, would remain restricted.

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

The palm ringgit's currency of trade has weakened by 0.15% versus the dollar. This makes the commodity slightly more affordable for buyers who hold foreign currencies.

(source: Reuters)