You are here

Palm oil climbs to three-week high as crude oil prices jump

nabmPALMOIL6415.jpg
Malaysian palm oil futures rose on Monday for a third straight session to reach their highest in more than three weeks, lifted by rising crude oil and firm US soyoil prices, traders said.

[KUALA LUMPUR] Malaysian palm oil futures rose on Monday for a third straight session to reach their highest in more than three weeks, lifted by rising crude oil and firm US soyoil prices, traders said.

Oil futures climbed more than US$1 a barrel on Monday, after Saudi Arabia raised its prices for crude sales to Asia for the second month running, signalling improved demand in the region.

When markets re-opened after the Easter holiday, Brent crude touched a high of US$56.90 a barrel and US crude rose as much as to US$50.97.

Higher crude prices could attract interest for palm-based biodiesel.

sentifi.com

Market voices on:

The benchmark June contract on the Bursa Malaysia Derivatives rose 1.9 percent to RM2,233 a tonne after touching RM2,250, its highest since March 13.

But some traders said a sharp rise in late Monday trade was "abnormal" and the contract lacked fundamental domestic support. The Malaysian ringgit, which typically curbs buying interest for the ringgit-priced palm as it advances, strengthened to near a five-week peak of 3.6205 per dollar.

"Prices are very much overdone on the higher side for the day, knowing the weakness from the strong ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.

"We're hoping that our 10- and 15-days exports will provide us a clear price direction."

Total traded volume stood at 46,555 lots of 25 tonnes, above the average 35,000 lots.

Investors are also watching Indonesia's plans to impose levies on its exports of CPO and processed palm oil to fund its biodiesel mandates. The levies, which will come into effect after being signed by President Joko Widodo, may spur some initial demand for crude palm from neighbouring Malaysia.

The US soyoil May contract gained 1.3 per cent in late Asian trade, lending support to palm oil, a common food and fuel substitute.

However, analysts say that softening demand for palm oil, alongside another record global soybean harvest, may put pressure on the tropical oil.

"In line with the softer CPO price outlook, we estimate CPO prices from April-Dec 2015 should average lower at 2,170 ringgit per metric tonne in keeping with our RM2,200 ringgit full-year forecast," Kenanga Investment Bank said in a note on Monday.

REUTERS

grab

Receive $80 Grab vouchers valid for use on all Grab services except GrabHitch and GrabShuttle when you subscribe to BT All-Digital at only $0.99*/month.

Find out more at btsub.sg/promo

Powered by GET.comGetCom