Palm Oil Climbs to 3 Week High as Crude Oil Prices Jump

KUALA LUMPUR: Malaysian palm oil futures rose on Monday for a third straight session to reach their highest in more than three weeks, lifted by rising crude oil and firm U.S. soyoil prices, traders said. 

Oil futures climbed more than US$1 a barrel on Monday, after Saudi Arabia raised its prices for crude sales to Asia for the second month running, signalling improved demand in the region.

When markets re-opened after the Easter holiday, Brent crude  touched a high of $56.90 a barrel and U.S. crude  rose as much as to $50.97.

Higher crude prices could attract interest for palm-based biodiesel.

The benchmark June contract on the Bursa Malaysia Derivatives rose 1.9 percent to 2,233 ringgit ($614) a tonne  after touching 2,250 ringgit, its highest since March 13.

But some traders said a sharp rise in late Monday trade was “abnormal” and the contract lacked fundamental domestic support. The Malaysian ringgit, which typically curbs buying interest for the ringgit-priced palm as it advances, strengthened to near a five-week peak of 3.6205 per dollar.

“Prices are very much overdone on the higher side for the day, knowing the weakness from the strong ringgit,” said a trader with a foreign commodities brokerage in Kuala Lumpur. “We’re hoping that our 10- and 15-days exports will provide us a clear price direction.”  

Total traded volume stood at 46,555 lots of 25 tonnes, above the average 35,000 lots.

Investors are also watching Indonesia’s plans to impose levies on its exports of CPO and processed palm oil to fund its biodiesel mandates. The levies, which will come into effect after being signed by President Joko Widodo, may spur some initial demand for crude palm from neighbouring Malaysia.

The U.S. soyoil May contract gained 1.3 percent in late Asian trade, lending support to palm oil, a common food and fuel substitute. 

However, analysts say that softening demand for palm oil, alongside another record global soybean harvest, may put pressure on the tropical oil.

“In line with the softer CPO price outlook, we estimate CPO prices from April-Dec 2015 should average lower at 2,170 ringgit per metric tonne in keeping with our 2,200 ringgit full-year forecast,” Kenanga Investment Bank said in a note on Monday.

Palm, soy and crude oil prices at 1029 GMT
                                                                                                                                               
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      APR5    2240   +62.00    2214    2240      58
  MY PALM OIL      MAY5    2241   +45.00    2204    2256    5732
  MY PALM OIL      JUN5    2230   +39.00    2197    2250   24711
  CHINA PALM OLEIN SEP5    4660    -2.00    4660    4660   73414
  CHINA SOYOIL     SEP5    5372   -14.00    5372    5372   73934
  CBOT SOY OIL     MAY5   31.41    +8.60   30.93   31.52    4540
  INDIA PALM OIL   APR5  444.70    +8.60  438.40  447.00    1579
  INDIA SOYOIL     APR5  605.10   +14.85  592.80  605.90   31155
  NYMEX CRUDE      MAY5   50.65    +1.51   49.47   50.97   35996
                                                                                                                                               
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel
 
($1 = 3.6300 Malaysian ringgit)    
($1 = 6.1950 Chinese yuan)
($1 = 62.20 Indian rupee)- Reuters

Source : The Star

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