March 15, 2023 (MLN): Palm oil prices have seen an increase in early Asia trade, following the upward trend of soybean oil's gains overnight on the Chicago Board of Trade.
According to David Ng, a trader at Kuala Lumpur-based proprietary trading firm Iceberg X, the two oils often trade in tandem due to their use in similar products.
In addition to the correlation with soybean oil, bargain buying after the recent slump in CPO (crude palm oil) futures is also lending support to the current prices. Ng has pegged support for CPO futures at MYR3,850, with resistance at MYR4,250.
The Bursa Malaysia Derivatives contract for May delivery has seen an increase of MYR50, now standing at MYR4,032 a ton. This increase in price marks a positive development for palm oil producers, who have faced challenges in recent times due to oversupply and depressed prices.
Despite the positive developments, the palm oil industry continues to face scrutiny from environmental groups, who highlight concerns over deforestation, habitat destruction, and biodiversity loss in palm oil-producing regions. Efforts are being made by the industry to address these concerns, with sustainability initiatives and certifications becoming increasingly important in the palm oil market.
Overall, the increase in palm oil prices is a positive development for producers, although the industry will need to continue addressing sustainability concerns in order to maintain consumer trust and demand in the long term.
