Palm Oil Prices Rise Due to Tensions in the Middle East
This is reported by AgroReview
On Thursday, palm oil quotations showed a confident increase, occurring against the backdrop of rising oil prices due to escalating tensions in the Middle East. According to David Nga, a trader at the Malaysian company Iceberg X, the main factor supporting prices has been the effective blockade of the Strait of Hormuz, which contributes to high oil prices. He estimates that palm oil prices will remain around 4150 ringgits per ton, with resistance forming near the 4300 ringgit mark.
Price Dynamics and the Impact of the Oil Market
Futures for palm oil in Malaysia closed on Thursday at their highest level in the past month. The main contract FCPO1 for May delivery on the Bursa Malaysia Derivatives exchange rose by 26 ringgits, or 0.62%, closing at 4205 ringgits (1067.26 USD) per metric ton. At the beginning of the session, the price reached 4268 ringgits per ton — the highest level since January 30. After a brief dip at the start of trading, the market quickly recovered.
As noted by Anilkumar Bagani, head of the commodity research department at the brokerage firm, the intense rise in gasoil prices amid the crisis in the Middle East has led to palm oil currently being sold at a discount relative to gasoil. This has caused a sharp change in price dynamics and an increase in palm oil futures.
“Palm oil futures on the Bursa Malaysia exchange recovered after initial losses. The recovery of palm oil futures is explained by a significant change in price dynamics, as palm oil is now sold at a discount compared to gasoil due to the extraordinary rise in gasoil prices amid tensions in the Middle East,” said Anilkumar Bagani, head of the commodity research department at the brokerage firm.
Impact of the Market Situation and Prospects
The increase in demand for palm oil is also driven by the risk of supply disruptions from the Middle East. This factor may heighten interest in palm oil amid limited supplies of soybean and sunflower oil. On the Dalian exchange, the palm oil contract rose by 0.64%, while soybean oil remained unchanged. Meanwhile, on the Chicago Mercantile Exchange, soybean oil added 0.47%.
The market conditions for palm oil are directly dependent on the prices of alternative edible oils and the competition for market share in the global vegetable oil market. The ongoing rise in oil prices due to the war between the USA, Israel, and Iran is causing a reduction in production and forcing producers to implement additional safety measures to ensure stable supplies.
The rising futures prices for oil make palm oil an even more attractive raw material for biodiesel production. According to technical analyst Wang Tao from Reuters, a possible test of support at 4138 ringgits per ton could occur, and breaking through this level may lead to a price drop in the range of 4098–4121 ringgits per ton.