VEGOILS-Palm Extends Gain on Crude Oil Strength, Tight Stock Outlook

Band Mei Mei Chu

KUALA LUMPUR, April 5 (Reuters)Malaysian palm oil futures rose for a second consecutive session on Tuesday, lifted by strength in crude oil futures and surveys pointing to tight inventories at the end of March at the world’s second-largest producer.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange rose 146 ringgits, or 2.57%, to 5,838 ringgits ($1,385.71) per tonne at the lunch break.

According to Mohsin Mohammad, Director of Sarafiah Natural Resources, a cooking oil exporter based in Selangor, the overall commodity market appears to be heading in a bullish direction at present as stronger crude oil will support rising oil prices. Palm oil.

Demand is expected to increase in May and June when prices fall, but that could lead to a shortage of destinations due to the month of Ramadan, he said.

Production in Malaysia is expected to resume in the coming months as the weather improves.

Malaysia’s output in March rose 16.4% month-on-month to a three-month peak of 1.32 million tonnes, a Reuters survey showed on Monday. PALM/POLL

However, higher exports and lower imports likely offset production, keeping end-March stocks at 1.53 million tonnes, up 0.5% from the previous month, according to the survey.

Exports from April 1-5 fell 45% to 107,980 tonnes from the same week in March, cargo inspector Intertek Testing Services said.

Oil futures extended gains as the United States and Europe forecast new sanctions to punish Moscow for alleged war crimes by Russian troops in Ukraine, adding to concerns over supply disruptions. WHERE

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

Chicago Board of Trade Soybean Oil Price BOcv1 rose 0.6% after a 1.6% overnight gain. The Dalian Stock Exchange was closed for a public holiday.

“Rising inflation and the ongoing war (in Ukraine) have not brought commodity prices to record highs, which leaves room for further upward moves, especially in sectors energy and agricultural products,” Mohsin said.

Palm oil could gain more in the range of 5,855 to 5,966 ringgit per tonne, as projection analysis suggests, Reuters technical analyst Wang Tao said. TECHNICAL/C

($1 = 4.2130 ringgit)


(Reporting by Mei Mei Chu; Editing by Subhranshu Sahu)

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