Palm oil prices rise on Dalian oil demand and stronger Dalian crudes

Malaysian palm oils futures closed higher on Wednesday. They were boosted by the stronger Dalian edible oil, and traders were hopeful about a possible resumption in palm oil demand out of India.

At the close, the benchmark April palm oil contract on Bursa Derivatives Exchange rose 24 ringgit or 0.56% to 4,332 Ringgit per metric ton. The contract fell 1.35% Tuesday.

Anilkumar bagani, head of commodity research at Mumbai's Sunvin Group, says that market participants are confident about India resuming its palm oil purchases in order to replenish the country's stocks, after palm oil imports fell to a multi-year low in January.

Bagani added that "the broader positive trade of Chinese vegetable oils in Asian hours also played a role in some of the strength seen in crude oil futures."

Dalian's palm oil contract saw a 3.04% increase, while the most active soyoil contract grew by 2.97%. Chicago Board of Trade soyoil prices fell 0.7%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.

Five dealers reported that India's palm-oil imports fell to their lowest level in 14 years in January as refiners substituted the cheaper soyoil with palm oil due to palm oil's negative margins.

A survey found that Malaysian palm oil inventories likely dropped to their lowest level in almost two years in January, due to adverse weather conditions disrupting production. However, lower exports partially offset the decline.

By February 2, 2024-25 soybean imports from the European Union had reached 8.27 millions metric tons, compared to 7.32 million metric tons a year ago.

Data published by the European Commission revealed that EU palm oil imports fell to 1,69 million tonnes from 2,14 million tons a year ago.

The palm ringgit's currency has strengthened by 0.29% against U.S. dollars, increasing the price of the commodity for buyers who hold foreign currencies.

(source: Reuters)