KUALA LUMPUR: Due to a rise in crude oil prices, Malaysian palm oil futures rose by close to 3% on Monday to close to $3,870 per tonne, hovering at a two-week high.
Saudi Arabia, the world’s top producer, said that OPEC+ reduced production even further on Sunday as a precaution to maintain market stability.
The benchmark palm oil futures contract for June delivery on the Bursa Malaysia Derivatives Exchange had recovered from a brief fall late last week, rising 97 ringgit, or 2.6%, to 3,858 ringgit ($872.85) per tonne.
According to Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics, “a buying frenzy, fuelled by crude oil, sent palm futures up.”
He added, “The demand and use of palm-biodiesel become more attractive as fossil fuel prices rise.” Malaysia said on Sunday it has marked an update of understanding with a China government-supported exchange relationship to improve palm oil exchanging and participation.
In the meantime, Malaysia announced on Sunday that it had executed a memorandum of understanding with a trade association supported by the Chinese government to encourage palm oil trading and cooperation.
Meanwhile, cargo surveyors’ data indicated that during the first 25 days of March, shipments of Malaysian palm oil products increased between 11.4% and 19.8% month-over-month.
In the interim, to support domestic demand, rival Indonesia has restricted shipments until the end of Ramadan and the Eid celebration. Further, the El Nino atmospheric condition, that predicts to arise in mid-2023, could bring down creation in Malaysia and Indonesia one year from now.