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Tuesday, 08 May, 2018

Palm sees strongest jump in 3 weeks tracking related oils

KUALA LUMPUR (May 7): Malaysian palm oil futures clocked their highest gains in three weeks in early trade on Monday, tracking an uptrend in crude oil prices and supported by soyoil on the US Chicago Board of Trade.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange jumped 1.6% to RM2,377 (US$603.30) a tonne at the midday break, its biggest gain since April 17.

It earlier rose as much as 1.7% to RM2,379, its highest level since May 2.  

Trading volume stood at 15,684 lots of 25 tonnes each.

"Palm market rose tracking crude oil's price movement, which went up a lot on Friday. On a favourable palm oil to gas oil spread, there is new buying for crude palm oil," said a Kuala Lumpur based trader.

"Gains in rival oilseed are also lending support."

Palm oil prices are impacted by movements of crude oil, as it is used as feedstock to make biodiesel. Rising oil prices in recent weeks have made biodiesel production more economical, as gas oil's price premium over palm last widened to US$56 per tonne on Monday.

Brent crude oil futures rose above US$70 a barrel on Monday for the first time since November 2014, on the back of a deepening economic crisis in major oil exporter Venezuela.

In other related oils, gains in US soyoil on the Chicago Board of Trade provided additional support to palm. The Chicago July soybean oil contract was last up 0.5% on Friday.

Palm oil is impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.

Meanwhile, the September soybean oil on China's Dalian Commodity Exchange rose 0.9%, while the Dalian September palm oil contract was up 0.8%.

Further movement in the palm market will depend on upcoming official data release by industry regulator the Malaysian Palm Oil Board.

Malaysian palm oil inventories at end-April are expected to fall 4.1% to 2.23 million tonnes, the lowest in six months, according to a Reuters poll of nine traders, planters and analysts.

Meanwhile, the survey respondents also forecast that April exports will fall 5.5% on-month to 1.48 million tonnes, but output will remain flat at 1.57 million tonnes.

Official data for the month of April is scheduled for release on Thursday, May 10 at around 0430 GMT.

Palm, soy and crude oil prices, as of 0436 GMT

Contract            Month     Last   Change      Low    High   Volume
MY PALM OIL       MAY8      2354  +35.00    2354   2354      62
MY PALM OIL       JUN8      2378  +38.00    2358   2378    1564
MY PALM OIL       JUL8      2377  +37.00    2352   2379    7889
CHINA PALM OLEIN  SEP8      4984  +40.00    4946   4988  189224
CHINA SOYOIL      SEP8      5802  +50.00    5762   5824  311016
CBOT SOY OIL      JUL8     30.91   -0.02   30.68  30.95    4014
INDIA PALM OIL    MAY8    645.20   +3.40  645.10    647      53
INDIA SOYOIL      MAY8         0   +0.00 0 0 0
NYMEX CRUDE       JUN8     70.39   +0.67   69.71  70.69   75056

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM3.9400)
(US$1 = 67.0475 Indian rupees)
(US$1 = 6.3538 Chinese yuan)    

Source : The Edge Markets

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