Palm prices rise as Middle East tensions spur buying interest

Malaysian palm futures rose slightly on Monday, recovering from the previous session’s loss. Geopolitical concerns in the Middle East boosted crude oil prices and sparked buying interest in the oilseed.

Palm oil is more appealing as a biodiesel feedstock due to the stronger crude?oil?futures.

At the close, the benchmark contract for palm oil delivery in June on the Bursa Derivatives exchange was up 19 Ringgit or 0.42% at 4,557 Ringgit ($1,146.99). The contract fell?2.26% Friday.

Paramalingam Supramaniam said that renewed Middle East tensions reignited interest in the stock market. After Friday's sharp drop, traders added a premium to prices as they added risk back into them, according to Paramalingam Supramaniam.

Supramaniam?said that despite the better-than-expected demand and supply, gains will be limited in the next few days. Cargo surveyors estimate that Malaysian palm oil exports for the period?April 1-10 fell between 30.7% to 38.9% on a month-to-month basis. Oil prices rose above $100 per barrel after the U.S. Navy announced plans to block vessels from and to Iran through the Strait of Hormuz. This was in response to Washington and Tehran failing to reach an agreement to end their war. Malaysia's palm-oil inventories fell?in march, for the third month in a row and a seven-month high, as an increase in exports outweighed a modest rise in production.

Dalian's soyoil contract, which is the most active in Dalian, fell 0.39% while its palm oil contract dropped 1.47%. Chicago Board of Trade soyoil prices were up by 1.33%.

Palm oil follows the price movement of other edible oils as it competes for a market share in the global vegetable oils. India's palm oils imports fell by nearly 19% in March, and reached a new low for the past three months, after refiners halted purchases due to a rise in tropical oil prices in line with energy market.

(source: Reuters)