Palm oil futures extended their gains on Monday for the fourth consecutive session, driven by strength in rival edible oils. However, concerns over production, stemming from poor weather conditions in Malaysia, the world’s second-largest producer, kept the rise in check.
The December delivery benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed up by 30 ringgit, or 0.76%, settling at 3,977 ringgit per metric ton, equivalent to $946.90. Earlier in the session, the contract reached a high of 4,040 ringgit per ton, but retreated following reports that Indian refiners had cancelled 100,000 metric tons of palm oil purchases scheduled for delivery between October and December.
The current upward momentum in the palm oil market continues to follow the strength seen in competing edible oils. Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari, confirmed that palm oil is benefiting from this broader trend.
Dalian’s most-active soyoil contract rose by 0.23%, while its palm oil counterpart added 0.93%. Meanwhile, on the Chicago Board of Trade, soyoil prices were up by 1.02%. Palm oil prices tend to mirror movements in these rival edible oils, as they vie for dominance in the global vegetable oils market.
In a related development, oil prices saw a slight increase on Monday. This followed a U.S. interest rate cut last week and a decrease in crude supply due to the aftermath of Hurricane Francine, which managed to offset weaker demand from China, the top oil importer. At 1002 GMT, Brent crude futures for November were up by 0.2%, trading at $74.64 a barrel. Stronger crude oil futures typically enhance the appeal of palm oil as a biodiesel feedstock.
Despite these developments, the ringgit, which is the currency used for palm oil trade, remained steady against the dollar. A firmer ringgit tends to make palm oil more expensive for international buyers and consequently limits its price gains.
The palm oil market’s performance continues to be influenced by external factors, particularly fluctuations in rival edible oil prices and crude oil movements, while the currency exchange rates and weather patterns remain critical variables.
Dekel Agri-Vision PLC (LON:DKL) aspires to become a leading agro-industrial company in West Africa, one that creates value for shareholders whilst at all times placing the interests of the local communities and environment in which it operates in at the heart of its operations.
