Palm oil continues to gain on Indonesian supply outlook and biodiesel plans
The price of palm oil in Malaysia rose for the fifth day running on Tuesday. It was its biggest rally in six week amid expectations that supply would tighten and Indonesian plans to increase biodiesel blend rates.
By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was up 0.71% at 3,952 Ringgit ($908.92) per metric ton.
Anilkumar bagani, head of research at Mumbai-based Sunvin Group's vegetable oils brokerage, cited a Bloomberg article, to support the prices. The Indonesian Palm Oil Association estimates that Indonesian palm oil production in 2024 will fall from 54.84 millions tons a year earlier to 52-53million tons.
Indonesian President-elect Prabowo Subito wants to blend biodiesel with 50% palm oil by the beginning of next year. He said this would reduce fuel imports from $20 billion annually.
Bisnis.com, citing Isy Karam, a senior minister in the trade ministry, reported that the country's ministry of trade is considering a plan to reduce its palm oil export taxes to make them more competitive, given a weakening global demand.
Dalian's palm oil contract rose 1.56%, while the most active soyoil contract increased 1.87%. Chicago Board of Trade soyoil prices fell 0.42%.
As they compete to gain a share of the global vegetable oil market, palm oil monitors price movements for related oils.
The Malaysian Ringgit, the palm oil industry's currency, has depreciated by 0.14% in relation to the dollar. Palm oil becomes more appealing to foreign currency holders when the ringgit is weaker.
Wang Tao, a technical analyst, believes that palm oil could retest the resistance level of 3,985 Ringgit. A break above this would confirm a range between 4,003 and 4,032 Ringgit as a possible target, according to Wang Tao. ($1 = 4.3480 ringgit)
(source: Reuters)
