Malaysian Palm Oil Prices Surge on Soyoil and Crude Oil Gains

KUALA LUMPUR: Malaysian palm oil futures have shown a significant rise, climbing more than 2% on Friday. This increase is largely attributed to stronger soyoil and crude oil prices, as well as positive domestic export estimates. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 134 ringgit, or 2.85%, reaching 4,830 ringgit ($1,103.24) per metric ton during the midday break. This marks a 3.53% increase for the week, positioning the market for its second consecutive weekly gain.

The palm oil market is responding positively to the uptick in soyoil and crude oil prices. A trader from Kuala Lumpur-based Iceberg X Sdn Bhd noted, "The recent strong export pace is also keeping the positive sentiment in the palm oil market." This sentiment is further supported by estimates from cargo surveyor Intertek Testing Services, which reported an 11.5% rise in Malaysian palm oil product exports for October. Data from AmSpec Agri Malaysia is expected later in the day, which may provide additional insights.

In related markets, Dalian’s most-active soyoil contract rose by 1.73%, while its palm oil contract added 2.12%. On the Chicago Board of Trade, soyoil prices increased by 1.77%. It is important to note that palm oil often tracks the price movements of rival edible oils, as it competes for a share in the global vegetable oils market.

Moreover, oil prices have extended their gains, climbing more than $1 a barrel. This rise comes amid escalating geopolitical tensions in the Middle East, particularly following reports that Iran is preparing a retaliatory strike on Israel from Iraq in the coming days. The increase in crude oil futures makes palm oil a more attractive option for biodiesel feedstock.

Additionally, the ringgit, which is the currency used for palm oil trade, weakened by 0.09% against the US dollar. This depreciation makes palm oil cheaper for buyers who hold foreign currencies. In a related development, Indonesia has raised its crude palm oil reference price for November to $961.97 per metric ton, up from $893.64 in October. This adjustment will result in an export tax of $124 per ton for November.

The current trends in palm oil prices reflect a complex interplay of market dynamics, including export performance and global oil prices. As the market continues to evolve, stakeholders in the palm oil industry must remain vigilant and adaptable to these changes. Understanding these factors not only helps in making informed decisions but also highlights the importance of palm oil in the global agricultural landscape.