VEGOILS - Palm closes 3% more, reaches highest level in nearly two and half years

Malaysian palm futures rose more than 3% Friday, the highest level in nearly two-and-a-half years, in response to higher soyoil, crude oil, and positive estimates for domestic exports.

The benchmark contract for palm oil delivery in January on the Bursa Derivatives Exchange rose 169 ringgit or 3.6% to 4,865 Ringgit ($1,112.00), its highest closing since June 30, 2020.

This week the contract posted a gain of 7.25%, which is its second weekly increase in a row and its best performance since mid-June.

David Ng is a proprietary trader with Kuala Lumpur's Iceberg X Sdn. Bhd. He said that the palm market was reacting to higher soyoil prices and crude oil.

The recent export growth is also sustaining the positive sentiment on the palm oil markets.

Exports of palm oil products from Malaysia rose between 11.5% to 13.7% during October, compared with the previous month.

Dalian's palm oil contract grew by 2.46%, while the most active soyoil contract increased by 1.75%. Chicago Board of Trade soyoil prices were up by 2.46%.

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

The oil prices continued to rise on Friday. They climbed more than $1 per barrel, reversing the weekly declines, following reports that Iran, a major oil producer, was planning a retaliatory attack on Israel by Iraq in coming days.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit currency of trade remained unchanged in relation to the U.S. Dollar.

A trade ministry official said that Indonesia increased its crude palm oil price reference for November from $893.64 per metric tonne in October to $961.97. The new price means that the November export tax will be $124 per metric ton. ($1 = 4.3775 ringgit)

(source: Reuters)