Palm oil futures extended their gains for the fourth consecutive session on Monday. The increase was driven by concerns over reduced production and a rise in rival edible oil prices. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange increased by 71 ringgit, or 1.81%, reaching 3,987 ringgit ($845.96) per metric ton by midday.
Anilkumar Bagani, head of research at Mumbai-based Sunvin Group, noted that the futures were trading significantly higher due to gains and bullish momentum in rival oils. The rise in energy prices also contributed to the positive trend. Dalian’s most-active soyoil contract increased by 0.97%, and its palm oil contract rose by 2.72%. Meanwhile, soyoil prices on the Chicago Board of Trade were up by 1.64%.
However, exports of Malaysian palm oil products fell by 11.8% in June, with 1,306,689 tons shipped compared to 1,481,916 tons in May, as reported by cargo surveyor Intertek Testing Services. In contrast, Indonesia set its crude palm oil reference price for July at $800.75 per ton, an increase from $778.82 in June. This new reference price resulted in an export tax for crude palm oil at $35 per ton and a levy at $85.
The palm oil market is influenced by price movements in related oils, as they vie for a share of the global vegetable oils market. Oil prices saw an uptick on Monday due to forecasts of a supply deficit caused by peak summer fuel consumption and OPEC+ production cuts in the third quarter. However, global economic challenges and increasing non-OPEC+ output limited these gains. Higher crude oil futures enhance the attractiveness of palm oil as a feedstock for biodiesel.
Palm oil prices appear neutral within the range of 3,899 to 3,927 ringgit per metric ton. A breakout from this range could indicate a new direction, according to Reuters’ technical analyst Wang Tao.
Palm oil futures have been on an upward trend due to production worries and increases in competing edible oil prices. This trend, combined with fluctuating export figures and changing reference prices, highlights the dynamic nature of the palm oil market. As global economic factors and energy prices continue to influence the market, stakeholders must remain vigilant to navigate these changes effectively.
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.
