Palm prices rise as rival Dalian and Chicago oil prices also increase

Malaysian palm futures rose on Thursday, supported by higher crude oil prices, gains in other edible oils, and expectations for stronger biodiesel demands following Indonesia's decision to accelerate road testing of B50 blend.

After reaching an intraday peak of 4,628 Ringgit, the benchmark?palm-oil contract for May delivery at the Bursa Derivatives exchange gained 83 Ringgit or 1.84% to 4,582 Ringgit ($1,166.50).

A Kuala Lumpur based trader stated that "the futures are currently governed by the crude oil situation. Any massive upside in Dalian, Chicago, or crude will cause it to react."

The trader said that the news that Indonesia is accelerating the B50 implementations provides "support" to the market.

Dalian's palm oil contract grew 3.55%, while the most active soyoil contract gained 2.21 percent. Soyoil traded on the Chicago Board of Trade gained 1.18%.

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

The price of crude oil also increased as Iran intensified its attacks on oil and transportation facilities in the Middle East. This sparked fears of a long-term conflict and disruptions to oil flow through the Strait of Hormuz.

Palm oil is more attractive as a biodiesel feedstock because crude oil futures are stronger.

Indonesia will accelerate its B50 biodiesel road test, which is made from 50% palm oil and 50% conventional oil in case the Middle East conflict affects its crude oil supply.

The Malaysian Ringgit, the contract currency's?trade currency, has eased by 0.38% in relation to the U.S. Dollar, making palm oil cheaper for holders of foreign currencies.

GAPKI, Indonesia's largest producers' group, said that new orders for palm oil exports have moderated since the U.S./Israeli war on Iran?raised logistics and insurance costs.

According to Wang Tao, a technical analyst, palm oil could retrace in a moderate way to 4,494-4,414 ringgit a metric ton before testing resistance at 4,616.

(source: Reuters)