Palm rises for third day on stronger crude, rival oils

March 23, 2022: Malaysian palm oil futures rose for a third straight session on Wednesday, extending a recovery from their biggest weekly drop since 1986, as crude and some rival oils strengthened.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange gained 80 ringgit, or 1.34%, to 6,047 ringgit ($1,433.62) a tonne by the midday break.

"The absence of sunflower oil export from Ukraine and tightness in soybean crop in Brazil, Argentina and Paraguay is a major support for palm oil at the moment," said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

Dalian's palm oil contract DCPcv1 jumped 3.15%, while its most active soyoil contract DBYcv1 was down 0.62%. Soyoil prices on the Chicago Board of Trade BOcv1 rose 0.25%.

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

Palm prices were also underpinned by higher crude oil prices as a reported drop in U.S. crude inventories increased concerns about tight global supplies amid the hit to Russian exports from economic sanctions.

Stronger crude makes palm a more attractive option for biodiesel feedstock.

Palm oil may rise into a range of 6,104-6,188 ringgit per tonne, as it has pierced above resistance at 5,966 ringgit, Reuters technical analyst Wang Tao said.

Reuters