Palm oil reaches a one-month record as crude prices surge

Malaysian palm futures rose on Thursday. They closed at their highest levels in a month, supported by an increase in crude oil price.

The benchmark contract for palm oil delivery in May on the Bursa Malaysia Derivatives Exchange rose by 26 Ringgit (0.62%) to close at $4,205 ringgit (1,067.26) per ton. This is the highest price since February 5.

After a decline in early trading on Thursday, the contract reached a high of 4,268 ringgits per ton during this session.

"Bursa Malaysia crude Palm Oil Futures have recovered from their early losses. The recovery in palm futures can be attributed to a major shift in the price dynamics as palm oil now has a discount to gas oil because of gas oil's extraordinary rally amid?the Middle East conflicts," said Anilkumar bagani, commodity head at Mumbai-based brokerage Sunvin Group.

He added that the 'threat of disruptions in vegetable oil shipments to and from the Middle East have also supported palm oil price, as they may benefit from increased demand due to limited soy oil and sunflower oil supply.

Dalian's palm oil contract, which is the most active contract in Dalian, grew by 0.64%. Chicago Board of Trade Soy Oil gained 0.47%.

As it competes to gain a share in the global vegetable oil market, palm oil monitors the price fluctuations of its rival edible oils.

The oil prices rose on Thursday as the U.S. and Israeli war against Iran escalated. This continued to disrupt supply, causing some major producers to reduce production, while others took?measures? to ensure security of supply.

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

Technical analyst Wang Tao stated that palm?oil could retest the support level of 4,138 ringgits per metric ton. A break below this level would trigger a drop into the range 4,098-4121 ringgits.

(source: Reuters)