13 hours ago
- Business
- New Straits Times
Palm gains higher on Chicago's soyoil, crude oil rally
JAKARTA: Malaysian palm oil futures rose for the third straight session on Monday, tracking gains in Chicago soyoil after the US proposed increasing biofuels blending, and supported by the crude oil rally following tensions in the Middle East.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained RM156, or 3.98 per cent, to RM4,078 (US$961.79) a metric ton by the midday break.
US President Donald Trump's administration on Friday proposed increasing the amount of biofuels that oil refiners must blend into the nation's fuel mix over the next two years, driven by a surge in biomass-based diesel mandates, pushing soyoil prices higher.
"The broader edible oils market tracked gains in crude oil, as investors reacted to heightened risks of conflict between Israel and Iran. Supply disruption fears lead to heightened risk premiums," said Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova.
The push in higher energy prices increases both palm oil production costs and potential demand for biofuels. In essence, the biofuel sector acts as an alternative energy source to crude oil-derived fuels, he added.
Soyoil on the Chicago Board of Trade (CBOT) gained 4.51 per cent. Dalian's most-active soyoil contract was up 2.57 per cent, while its palm oil contract rose 3.76 per cent.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices were volatile on Monday after surging seven per cent on Friday, as renewed strikes by Israel and Iran over the weekend increased concerns that the battle could widen across the region and significantly disrupt oil exports from the Middle East.
Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.
Exports of Malaysian palm oil products for June 1–15 rose 26.30 per cent to 662,580 metric tons from 524,596 metric tons shipped during May 1–15, cargo surveyor Intertek Testing Services said on Sunday.
Palm oil still targets the RM3,962 (US$933.33) to RM3,998 range, as it has almost broken resistance at RM3,927 per metric ton, according to Reuters' technical analyst Wang Tao.
