Palm oil gains on stronger rivals, higher Malaysian export estimates

Malaysian palm oil futures rose on Tuesday after two sessions of losses, buoyed by stronger rival Dalian and Chicago contracts and higher export estimates.

The benchmark palm oil contract FCPOc3 for October delivery on the Bursa Malaysia Derivatives Exchange was up 1.19% to 3,920 ringgit ($838.50) a metric ton by the midday break.

The contract was seen trading sharply higher following a recovery in Chicago soyoil futures and strong Malaysian palm oil exports for July, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

The market is expected to test the 4,000 ringgit mark again, a Kuala Lumpur-based trader said.

Dalian’s most-active soyoil contract DBYcv1 ticked up 0.13%, while its palm oil contract DCPcv1 added 1.5%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.82%.

Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market.

Exports of Malaysian palm oil products for July 1-15 rose between 65.9% and 75.6% from a month earlier, according to cargo surveyors Intertek Testing Services and AmSpec Agri.

Cargo surveyor Societe Generale de Surveillance estimates exports of Malaysian palm oil products for July 1-15 at 786,830 tons, from 488,388 tons shipped during June 1-15, according to LSEG.

Oil prices slipped on Tuesday on worries about a slowing Chinese economy crimping demand, though a growing consensus that the U.S. Federal Reserve will begin cutting its key interest rate as soon as September limited declines.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Malaysia’s benchmark crude palm oil futures are expected to average between 3,850 ringgit and 4,000 ringgit per ton this year, a slight increase from 2023, the Malaysian Palm Oil Association said on Monday.

The ringgit MYR=, palm’s currency of trade, weakened 0.17% against the dollar, making the commodity less expensive for buyers holding foreign currencies.

Tags: palm oil, futures, benchmark contract, soyoil, prices, Malaysia