VEGOILS - Palm up in hopes of better demand, but second consecutive weekly loss

Palm oil prices rose on Friday, on the hope of improved demand from India and China. However, they were still heading for their second consecutive weekly loss because of weakness in Chicago soyoil contracts and Malaysian palm oil exports that have been slowing down.

By midday, the benchmark contract for palm oil delivery in June on the Bursa Derivatives Market gained 5 ringgit or 0.11% to 4,418 Ringgit ($999.32).

This week, the contract has fallen by 3.45%.

Anilkumar bagani, Sunvin Group's head of research, said that the futures traded sideways with prices opening lower. This was due to the weakness in Chicago soybean futures as well as a slowdown in Malaysian palm oil.

Prices are rebounding, however, on the hope of a resurgence in destination demand from China and India.

Both countries are among the top palm oil importers in the world.

AmSpec Agri Malaysia, an independent inspection company in Malaysia, reported on Thursday that exports of palm oil products from Malaysia for the period March 1-20 were down 5%. Intertek Testing Servicesm, a cargo surveyor, reported a 14.2% decline.

Dalian's palm oil contract, which is the most active contract, fell by 0.09%. Chicago Board of Trade Soyoil Prices declined by 0.7%.

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

The impact of the drought on Argentina's soybean crop in 2024/2025 was made clearer by a leading grains exchange, which is the world's biggest exporter of soy oil and meal.

A plantation fund official announced on Tuesday that Indonesia would increase its palm oil export tax to 4.5%-10% from the current 3%-7.5% in order to fund a mandated rise in the amount used to make biodiesel.

Oil prices rose early in Asian trading on Friday and were on track for a second consecutive week of gains after new U.S. Sanctions against Iran and a plan by OPEC+ for seven members, to reduce output, raised bets that supply would tighten.

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

The palm ringgit's currency has strengthened to 0.07% versus the U.S. Dollar, increasing the price of the commodity for buyers with foreign currencies.

(source: Reuters)