The prices of Palm oil from Malaysia have increased because, as a result, expectations of increased biodiesel demand in response to rising crude oil prices and turmoil in the Middle East. This caused the benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange to rise 0.22% to close at 3,608 ringgit/tonne (about US$762.95/tonne).
Therefore, the rise in crude oil generated expectations of an increase in demand for palm oil. This made palm oil more attractive for biodiesel production. However, several factors limited the increase in palm oil prices.
- Weakness in vegetable oil values in China due to Chinese public holidays, leading to adjustments on the downside of the vegetable oil market.
- Slowdown in import demand from India, one of the main buyers of palm oil.
- Palm oil stocks in Malaysia are expected to rise, which could reach their highest level since October last year.
- A 26% drop in India's palm oil imports in September due to record existing stocks.
In summary, while Malaysian palm oil was positively influenced by expectations of increased biodiesel demand due to higher crude oil values, several factors limited this rally, including weakness in vegetable oil prices in China and slowdown in oil demand. imports from India, in addition to the prospect of an increase in palm oil stocks in Malaysia.
Source: Oils & Fats International
