Malaysian palm oil futures closed higher for the third straight session on Monday, tracking gains in Chicago soyoil after the US proposed higher biofuels blending volumes, and elevated crude oil prices.
JAKARTA: Malaysian palm oil futures closed higher for the third straight session on Monday, tracking gains in Chicago soyoil after the US proposed higher biofuels blending volumes, and elevated crude oil prices.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange gained RM171, or 4.36 per cent, to RM4,093 (US$965.79) a metric ton at the close.
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.
It pushed Chicago soyoil futures to their highest level in nearly 18 months on Monday, after rising more than 6.0 per cent on Friday.
Soyoil on the Chicago Board of Trade (CBOT) gained 5.39 per cent. Dalian’s most-active soyoil contract was up 2.45 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.
Darren Lim, commodities strategist at Singapore-based brokerage Phillip Nova, said the edible oils market tracked gains in crude oil since Friday when Israel bombed Iran.
“Supply disruption fears lead to heightened risk premiums,” said Lim.
Higher energy prices increase both palm oil production costs and potential demand for biofuels.
The biofuel sector acts as an alternative energy source to crude oil-derived fuels, Lim added.
Oil prices edged 0.7 per cent lower on Monday after a seven per cent surge on Friday, as renewed military strikes by Israel and Iran over the weekend left oil production and export facilities unaffected.
Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.
Cargo surveyor Intertek Testing Services said exports of Malaysian palm oil products for June 1–15 rose 26.3 per cent compared to May 1–15, while according to independent inspection company AmSpec Agri Malaysia it rose 17.8 per cent.
Source: New Straits Times
