VEGOILS - Palm posts second weekly increase despite MPOB stock decline

Malaysian palm futures posted a second weekly gain despite falling by nearly 1% during the session. Stockpiles higher than expected weighed down on prices while Indonesia's plans for biodiesel supported prices.

At the close, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery fell 45 ringgit (0.98%) to 4,546 Ringgit ($1,076.74) per metric ton. The contract increased by 2.34% in the past week.

David Ng is a proprietary trader with Kuala Lumpur's Iceberg X Sdn. Bhd. He said that the Malaysian Palm Oil Board report is bearish because stocks are higher than what was expected by the market.

Malaysian palm oil

Stocks

Data from the industry regulator showed that imports, amid a weakening local demand, outweighed a small decline in output to cause a rise in prices for the seventh month in ten months.

Ng said that Indonesia's B50 Biodiesel Plan was supporting the prices.

Indonesia announced on Thursday that it would implement its B50 Biodiesel Programme in the second half 2026. The plan could mean that Indonesia will not need to import diesel in the future.

Indonesia has said that it will require 5.3 million additional tons of crude palm oil in order to meet its B50 mandatory biodiesel plans by 2026.

Dalian's palm oil contract, which is the most active contract, fell 0.78%. Chicago Board of Trade soyoil fell by 0.77%.

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

The oil prices fell after Israel and Hamas reached an agreement on the first phase of the plan to end the Gaza war.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The dollar has weakened by 0.19%, which makes palm slightly cheaper to buyers who hold foreign currencies. Reporting by Ashley Tang, Editing by Sumana Nandy and Vijay Kishore.

(source: Reuters)