Malaysian palm oil price chalks up biggest daily gain in four months
08.05.2018 (The Star Online) - KUALA LUMPUR: Malaysian palm oil futures clocked their highest daily gain in four months on Monday, tracking an uptrend in crude oil prices and supported by soyoil on the U.S. Chicago Board of Trade.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange jumped 1.8 percent to 2,383 ringgit ($604.36) a tonne at the end of the trading day for its biggest daily gain since Jan. 2.
It earlier touched an intraday high of 2,385 ringgit.
Trading volumes stood at 38,066 lots of 25 tonnes each at the close of trade.
"The palm market rose, tracking crude oil's price movement, which went up a lot on Friday. On a favourable palm oil to gas oil spread, there is new buying for crude palm oil," one Kuala Lumpur-based trader said.
"Gains in rival oilseeds are also lending support." Palm oil prices are affected by movements of crude oil because it is used as feedstock for biodiesel. Rising oil prices in recent weeks have made biodiesel production more economical, with gas oil's price premium over palm widening to $58 a tonne on Monday.
Brent crude oil futures rose above $70 a barrel on Monday for the first time since November 2014, driven higher by major oil exporter Venezuela's deepening economic crisis.
In other related oils, gains in U.S. soyoil on the Chicago Board of Trade provided additional support to palm. The Chicago July soybean oil contract was last up 0.4 percent on Monday.
Palm oil prices are also affected by movements in rival edible oils that competing in the global vegetable oils market.
September soybean oil on China's Dalian Commodity Exchange rose 0.9 percent while the Dalian September palm oil contract was up 0.7 percent.
Further movement in the palm market will depend on upcoming official data from the Malaysian Palm Oil Board, the industry regulator.
Malaysian palm oil inventories at the end of April are expected to show a 4.1 percent drop to 2.23 million tonnes, the lowest level in six months, according to a Reuters poll of nine traders, planters and analysts.
The survey respondents also forecast that April exports will fall 5.5 percent month on month to 1.48 million tonnes, but output will remain flat at 1.57 million tonnes.
Official data for April is scheduled for release on Thursday, May 10, at about 0430 GMT. - Reuters