Palm climbs over 2% on crude oil strength

April 5, 2022: Malaysian palm oil futures rose more than 2% on Tuesday, lifted by strength in crude oil futures, and as surveys indicated tight end-March inventories in the world's second-largest producer.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange rose 147 ringgit, or 2.58%, to 5,839 ringgit ($1,384.96) a tonne in early trade, extending gains to a second session.

FUNDAMENTALS

Oil futures rose as the potential for more sanctions following alleged war crimes by Russian troops in Ukraine added to concerns about supply disruptions. O/R

Stronger crude futures make palm a more attractive option for biodiesel feedstock.

Malaysia's production in March was seen expanding 16.4% month-on-month to a three-month peak of 1.32 million tonnes, a Reuters survey showed on Monday. PALM/POLL

However, rising exports and lower imports likely offset production, keeping end-March inventories tight at 1.53 million tonnes - a 0.5% uptick from the previous month, according to the survey.

Soyoil prices on the Chicago Board of Trade BOcv1 rose 0.4% after a 1.6% overnight gain. The Dalian exchange was closed for a public holiday.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may gain more into a range of 5,855-5,966 ringgit per tonne, as suggested by a projection analysis, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Asian stocks ticked up to their highest in more than a month supported by broad gains on Wall Street, while the euro was stuck near a one-week low against the dollar amid talk of more sanctions against Moscow. 

Reuters