MARKET DEVELOPMENT
VEGOILS-Palm oil rebounds Russia sanctions fan supply worries
VEGOILS-Palm oil rebounds Russia sanctions fan supply worries
28.02.2022 (www.nasdaq.com) - By Mei Mei Chu
KUALA LUMPUR, Feb 28 (Reuters) - Malaysian palm oil futures rose on Monday for a seventh session in eight, boosted by a rally in crude and soyoil prices after Western nations stepped up sanctions against Russia for invading Ukraine and fuelled prospects of tight global supplies.
The benchmark palm oil contract FCPOc3 for May delivery on the Bursa Malaysia Derivatives Exchange rose 211 ringgit, or 3.54%, to 6,177 ringgit ($1,470.71) a tonne by the midday break.
The contract had jumped as much as 5.1% to hover near a record high scaled last week.
"The ongoing war between Russia and Ukraine has supported palm oil like never before," said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Russian President Vladimir Putin put the country's nuclear deterrent on high alert on Sunday in the face of a barrage of Western reprisals for his war on Ukraine, including blocking some Russian banks from the SWIFT international payments system.
Russian exports of all commodities from oil and metals to grains will be severely disrupted by Western sanctions, dealing a blow to Russia's economy and hurting the West with a spike in prices and inflation, traders and analysts said.
Brent crude prices soared above $100 a barrel, making palm a more attractive option for biodiesel feedstock. O/R
Destination markets like India are turning to palm oil to cover ahead of Muslims' holy month of Ramadan as Ukrainian ports are shut, Bagani said, adding that higher price offerings and unattractive import and processing margins kept trades at bay.
"At current record high levels, palm oil prices are prone for a deep profit-taking and market would be reluctant to trade unless very necessary," he added.
Dalian's most-active soyoil contract DBYcv1 fell 1%, while its palm oil contract DCPcv1 eased 1.7%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 3.8%.
Palm oil may open much high on Monday, and start to drop thereafter, Reuters technical analyst Wang Tao had said. TECH/C
($1 = 4.2000 ringgit)
(Reporting by Mei Mei Chu; Editing by Sherry Jacob-Phillips and Uttaresh.V)