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Malaysian CPO Futures Extend Gains Despite Market Pressures

20 Sep 2024 4:59 pm
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MUMBAI, 20 Sep (Commoditiescontrol): Malaysian crude palm oil (CPO) futures saw a third straight session of gains on Friday, recording a weekly increase amid strength in rival Dalian contracts.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed at 3,948 ringgit ($940.00) per metric ton, up by 72 ringgit or 1.86%. This marks a 3.5% gain for the week following two consecutive weeks of decline.

The recent uptick in Malaysian palm oil futures has resulted in the commodity trading at a premium compared to other oils, such as Northwest Europe sunflower oil and U.S. soybean oil, according to analysts. However, this high price level may not be sustainable unless a broader discount against major oils is implemented to maintain demand, particularly as the industry's peak output period has been delayed to Q4.

In related markets, Dalian’s most-active soyoil contract rose by 0.82%, while its palm oil contract increased by 1.46%. Conversely, soyoil prices on the Chicago Board of Trade fell by 0.05%. Palm oil prices are influenced by the movements of rival edible oils, as they vie for a share of the global vegetable oils market.

Crude oil prices eased on Friday but are set to end the week with gains for the second consecutive week due to significant U.S. interest rate cuts and declining global stockpiles. Brent futures were trading 0.39% lower at $74.59 per barrel at 0956 GMT. Lower crude oil futures reduce the attractiveness of palm oil as a biodiesel feedstock.

The ringgit, which is the currency used for palm oil trade, strengthened by 0.12% against the dollar, making palm oil more expensive for foreign buyers and limiting its gains.

Additionally, cargo surveyors estimated that Malaysian palm oil exports increased between 6.8% and 10.1% during the first 20 days of September compared to the previous month.

In Indonesia, the largest palm oil exporter globally, a new set of monthly levies will be introduced to boost competitiveness against rival edible oils, as per a recent regulation. However, Indonesia's palm oil exports are expected to decline this year due to heightened domestic consumption driven by an increased biodiesel blending mandate and a slight production decrease, according to industry experts.


(By Commoditiescontrol Bureau; +91 98201 30172)


       
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