Malaysian palm oil futures rose on Monday after two consecutive sessions of decline, buoyed by stronger crude oil prices and gains in Chicago soyoil. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange increased by 37 ringgit, or 0.82%, to 4,290 ringgit ($998.37) per metric ton in early trade.
This comes after the contract had fallen by 1.3% over the past two sessions. Palm oil often tracks the prices of other edible oils, like soyoil, due to their competition in the global vegetable oils market.
While Dalian’s most-active soyoil and palm oil contracts slipped, Chicago soyoil prices rose by 0.57%. In parallel, Brent crude futures for December rose 0.25% to $73.24 per barrel, as concerns about supply disruptions in the Middle East eased. Stronger crude oil prices make palm oil more attractive as a biodiesel feedstock.
Meanwhile, the ringgit strengthened slightly against the US dollar, making palm oil more expensive for foreign buyers. Export estimates for Malaysian palm oil products rose by 8.7% during Oct. 1-20, according to Intertek Testing Services, with further data expected from AmSpec Agri Malaysia.
Additionally, Malaysia is planning to raise the threshold for the windfall profit levy (WPL) on palm oil and revise export duties on crude palm oil. These measures aim to reduce the burden of production costs and give the palm oil refining industry competitive advantages similar to those in Indonesia, according to Glenauk Economics.
