Malaysian palm oil futures ended 2% higher on Friday, bouncing back and posting weekly gains, tracking firmer soybean oil prices in Chicago.
FCPO1 palm oil benchmark contract! for March delivery on the Bursa Malaysia Derivatives Exchange rose 97 ringgit, or 2.26%, to 4,393 ringgit ($977.74) per metric ton at the close.
The contract rose 0.57% this week.
“Crude palm oil futures are seen trading higher on the back of a strong recovery in Chicago soybean oil overnight and during Asian hours today,” said Anilkumar Bagani, head of research at Mumbai-based edible oil broker Sunvin Group.
Bagani, however, said expectations of a drop in Indonesia’s reference palm oil price in February, uncertainty over the success of Indonesia’s B40 biodiesel mandate, and sluggish Dalian palm oil futures prices limited the increase.
Dalian’s most active soybean oil contract (DBYcv1) rose 0.88%, while the palm oil contract CPO1! rose 0.21%. Soybean oil price on the Chicago Board of Trade ZL1! up 3.23%.
Palm oil follows the price movements of its rival vegetable oils, as it competes for a share of the global vegetable oil market.
Malaysia’s palm oil stocks fell for the third month in a row, falling 6.91% to 1.71 million metric tons at the end of December, while crude palm oil production fell 8.3% and exports plunged 9.97%, data from the Petroleum Council Malaysian palm oil shows on Friday.
Cargo surveyors estimate Malaysian palm oil exports fell between 21.4% and 26.8% during the January 1-10 period.
Oil prices rose and were on track for a third straight week of gains as traders focused on potential supply disruptions due to sanctions, while cold conditions in parts of the United States and Europe were expected to boost fuel demand.
The future of stronger crude oil makes palm oil a more attractive choice for biodiesel feedstock.
The Malaysian ringgit USDMYR, the palm oil trading currency, strengthened 0.16% against the dollar, making the commodity more expensive for buyers holding foreign currency.
Source: Reuters
