Palm oil reaches 15-week peak, posting third weekly gain

The price of Malaysian palm oil futures rose to a 15 week high on Friday. This was a result of a strong oil price and the rebound in Dalian palm olein futures.

At the close, the benchmark palm oil contract on Bursa Derivatives Exchange for October delivery gained 13 ringgit or 0.28%. It was trading at 4,723 Ringgit ($1,155.33). Futures recorded a weekly gain of 2.74%.

The futures opened higher as a continuation of the newly triggered rally. This was due to a persistent bullishness, followed by a resurgent Dalian's palmolein futures and a perspective tightness for palm oil exports from Indonesia because of newly launched B50 biodiesel mandat.

Dalian's most-active palm oil contract grew 1.66%, while soyoil prices rose 1.33%. Prices of soyoil on the Chicago Board of Trade fell by 0.99%.

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

Victor Almeida of the industry association Abrapalma said that Brazil could triple its palm oil production area in the next 10 years by expanding the cultivation on deforested land within the Amazon.

Rabobank reported on Thursday that the soybean crop in Brazil for 2026/27, which is set to be planted around September, will?fall 2% to 178 million tonnes from its record-breaking last cycle. Meanwhile, market challenges may lead to an?stabilisation of the planted area.

Prices of oil futures?retreated on Friday, but they are still expected to make a big gain this week due to concerns over?disrupted?energy flows in the Red Sea? and?further escalation of the U.S./Israeli war against Iran.

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

(source: Reuters)