Palm oil tracks crude oil, while rival edible oils are higher

Malaysian palm futures continued to?gain on Monday, following the strength in crude oil 'prices. Gains in rival edible oil prices at the Dalian and Chicago markets also provided additional support.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for delivery in 'July' had gained 34 ringgit (0.76%) to $4,484 ringgit (1,134.33 USD) per metric ton.

The futures prices are slightly higher due to the stronger crude oil price. As tensions have increased in the Middle East, shipping activity in and out the Gulf has been reduced. This is helping the prices recover from last Friday's steep losses.

Chicago's soyoil complex has a mixed performance, as soyoil is recovering from oil/meal spread and higher crude oil prices.

Crude oil prices rose more than 5% on Monday amid fears that the "ceasefire" between the United States, Iran, and other countries could fall apart after the U.S. seizes an Iranian cargo vessel, while the traffic through the Strait of Hormuz remains largely halted.

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

Dalian's soyoil contract, which is the most active in Dalian, grew by 0.06% while palm oil contracts?added 0.34%. Prices of soyoil on the Chicago Board of Trade rose by 0.81%.

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

The palm?ringgit (?currency? of trade) has weakened by 0.08% versus the dollar. This makes the commodity slightly cheaper to buyers who hold foreign currencies.

The Malaysian Palm Oil Board announced that the consumption of palm oil-based biodiesel in Malaysia is expected to increase by more than 300,00 metric tons per year. This will be due to the fact that Malaysia has joined Indonesia, its top producer, to raise blending mandates, reducing reliance on imported energy.

According to Wang Tao, technical analyst, Palm?oil could retest the support level of?4,440 per metric tonne. A break below this would open the door to the range 4,349-4.408 ringgit.

(source: Reuters)