Palm prices rise by over 1% amid Middle East tensions

The price of Malaysian palm oil futures rose by more than 1% on Monday. This was a slight improvement from the previous session, when geopolitical concerns in the Middle East increased the prices of crude oil and the buying interest in the oilseed.

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

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for June delivery was up 50 Ringgit or 1.1% at 4,588 Ringgit ($1,155.38). The contract fell by 2.26% on the Friday.

After Friday's steep sell-off, traders added back a risk premium to prices, according to Paramalingam Supramaniam of brokerage Pelindung Bestari.

Supramaniam stated that despite the fact that supply is better than expected and demand is constrained, gains will be limited in the next few days.

Exports of palm oil from Malaysia for the period April 1-10 are likely to have fallen between 30.7% - 38.9% on a monthly basis, according to cargo surveyors.

Oil prices rose above $100 per barrel after Washington and Tehran failed to agree on a peace deal. This could limit Iranian oil exports.

Malaysian palm oil inventories fell in March. They were down for the third consecutive month, and they reached a 7-month low. A surge in exports was more than enough to offset a modest rise in production.

Dalian's soyoil contract, which is the most active in Dalian, fell 0.02% while palm oil contracts dropped 0.62%. Prices of soyoil on the Chicago Board of Trade were up by 0.8%.

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

Technical analyst Wang Tao suggested that the price of palm oil could?revisit its March 25 low at 4,470 ringgit a metric ton. This is based on a retracement.

(source: Reuters)