Palm Oil Prices Rise Due to Tensions in the Middle East and Rising Oil Prices
This is reported by AgroReview
On Tuesday, global palm oil prices experienced a significant increase. This was attributed to the rising cost of oil and geopolitical tensions in the Middle East, particularly following Iran’s effective closure of the Strait of Hormuz, through which approximately 20% of the world’s oil is transported daily. This heightened uncertainty in the markets and led to price increases.
Price Dynamics and the Impact of Related Markets
According to David Nga, a trader at Iceberg X in Kuala Lumpur, the palm oil market shows a trend towards further growth. He notes that prices may stabilize above 4100 ringgit per ton, while the key resistance level is at 4280 ringgit. On the Bursa Malaysia Derivatives Exchange, the benchmark contract FCPO1 for May delivery rose by 39 ringgit (0.94%), reaching 4186 ringgit (1061.63 USD) per metric ton at the close of trading.
Palm oil trading has been increasing for the third consecutive session, with prices reaching their highest level in nearly four weeks. This is linked to the overall rise in competing oilseed prices on the Dalian and Chicago exchanges, as well as the strengthening of oil prices and anticipated declines in stocks.
“Palm oil futures on the Bursa Malaysia opened higher, following the strengthening of price spreads on competing oilseed crops,” said a trader from Kuala Lumpur, adding that the rise in energy prices is amid ongoing Israeli and American strikes on Iran.
On the Dalian exchange, the most active soybean oil contract rose by 1.16%, while the palm oil contract FCPO1 increased by 1.6%. In Chicago, soybean oil prices increased by 1.34%. The price dynamics of palm oil are closely linked to changes in the market for competing vegetable oils, as these products compete for market share globally.
Stock and Import Situation
Experts expect that palm oil stocks in Malaysia will decline for the second consecutive month in February, reaching a four-month low. This is due to seasonal production cuts that exceed the rate of export decline. At the same time, according to five dealers, palm oil imports to India rose by 10.1% in February, reaching a six-month high as processors increased purchases due to more favorable prices compared to other oils, which reduced sunflower oil imports.
According to Intertek Testing Services and the independent inspection company AmSpec Agri Malaysia, Malaysian palm oil exports in February fell by 21.5–25.5%.
Prices were also influenced by the rise in Brent crude oil prices, which reached their highest level since July 2024 due to the escalation of the Israeli-Iranian conflict and shipping risks through the Strait of Hormuz. This increased concerns about supply disruptions from a key oil-producing region of the world and made palm oil a more attractive raw material for biodiesel production.
From a technical perspective, analyst Wang Tao estimates that palm oil FCPO1 may test the support level at 4121 ringgit per ton. If the price falls below this level, further declines in the range of 4078–4098 ringgit are possible.