Palm oil prices rebound on Indonesian supply concerns and biodiesel hope
Malaysian palm futures rose on Wednesday. This was boosted by a more positive outlook for the supply in Indonesia, and optimism about the plan of the country's top producer to increase its biodiesel requirement.
The benchmark palm-oil contract for November delivery at the Bursa Derivatives exchange rose 13 ringgit or 0.33% to 3,936 Ringgit ($906.49) per metric ton. This was the fifth rise in six sessions before the midday break.
Mitesh Saiya is the trading manager of Mumbai-based trading company Kantilal Laxmichand & Co. He said that expectations of lower Indonesian Palm Oil production this year due to unsupportive climate and aging trees are keeping the market sentiment bullish.
Saiya added that Indonesia's plans for a higher biodiesel mandate by 2025 will likely limit the export of palm oil, which in turn would support global palm prices.
The Indonesia Palm Oil Association reported that Indonesian palm oil exports in June rose by 71.8% compared to May, reaching 3.385 millions metric tons. However, they fell by 1.88% on an annual basis.
Data from Intertek Testing Services, a cargo surveyor, and AmSpec Agri Malaysia, an independent inspection company showed that Malaysian palm oil exports between Aug. 1-25 were down between 14.1% to 14.9% compared with a month ago.
Bisnis.com, a news website in Indonesia, reported that the trade ministry of Indonesia is considering adjusting its palm oil export taxes to increase the commodity's competitiveness amid a weakening global demand.
Lingam Supramaniam is the director of Selangor brokerage Pelindung Bestari.
Dalian's palm oil contract, which is the most active contract, dropped by 0.57%. Chicago Board of Trade soyoil prices rose 0.15%.
As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.
After failing to break through resistance at 3,966 Ringgit, and following a declining trendline, technical analyst Wang Tao said that palm oil could retrace in the range 3,819-3,864 Ringgit per ton.
(source: Reuters)
