Palmettos climb on expected output decline, but Indonesian uncertainty limits gains
Malaysian palm futures rose a little 'on Monday, after two sessions of falling prices. This was due to the lower production expected in May. However, concerns over Indonesia's biodiesel mandate and export policies capped gains.
At the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was up 19 Ringgit or 0.42% at 4,573 Ringgit ($1,123.59).
Anilkumar bagani, commodity researcher at Sunvin Group, says the market is trading higher due to expectations of a larger-than-expected decline in Malaysian palm-oil production in May. He also expects a weaker Ringgit and a rebound in energy prices.
On June 10, the Malaysian Palm Oil Board is expected release its monthly data on supply and demand.
Bagani said that the recovery in Chicago soyoil prices also helped to support prices.
He added that the lack of clarity regarding Indonesia's mandatory blend rate of palm-based biodiesel at 50% or B50 and the prospect of aggressive cash market palm oil sales in Indonesia before the full implementation the new export system could hinder a recovery of Malaysian palm oil prices.
Chicago Board of Trade soyoil prices were up by 0.38%. Dalian's soyoil contract was down 0.82% while palm oil prices were down 0.49%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the?movements? of other edible oils.
The oil prices increased by?more? than 4% as new Israeli attacks on Iran and fresh attacks on Lebanon shattered hopes that the war would soon be over.
Palm oil is a more attractive feedstock for biodiesel due to the stronger crude?oil prices.
The palm ringgit's trade currency, the?ringgit fell 1.12% to the dollar. This made the commodity more affordable for foreign buyers. $1 = 4.0700 Ringgit (Reporting and editing by Ashley Tang, Harikrishnan Nair, and Sonia Cheema).
(source: Reuters)
