Malaysian palm oil futures closed higher on Monday, tracking gains in rival soyoil prices. The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 0.49% at 3,863 ringgit ($815.50) per metric ton at closing.
The rise in palm oil prices was influenced by the 0.76% gain in Dalian’s most-active soyoil contract and the 0.93% climb in soyoil prices on the Chicago Board of Trade. The outlook for the soybean harvest in Brazil’s Rio Grande do Sul has deteriorated significantly after heavy rains flooded the fields.
However, concerns over Malaysia’s palm oil exports weighed on the market. Malaysia’s palm oil exports from May 1 to 5 are expected to be sharply down, adding pressure on prices, according to Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.
In April, Malaysia’s palm oil product exports were estimated to have declined 7.79% month-on-month due to stiff price competition from other edible oils, according to a Reuters survey.
The weaker Malaysian ringgit against the dollar provided some support to palm oil prices, as a weaker local currency makes the commodity more attractive for foreign buyers.
Oil futures also climbed, supported by Saudi Arabia’s hike in June crude prices for most regions and the prospect of a Gaza ceasefire deal appearing slim, renewing fears the Israel-Hamas conflict could still widen in the key oil-producing region. Stronger crude oil prices make palm oil a more attractive option for biodiesel feedstock.
Looking ahead, analysts expect palm oil to rise this week towards the resistance levels of 3,930-3,950 ringgit per ton, with support at 3,680-3,700 ringgit per ton.