Malaysian palm oil futures gained on Friday for a second consecutive session, as easing recession concerns boosted edible oil prices, but the contract is set for a sharp weekly drop.
The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange rose 72 ringgit, or 1.74%, to 4,212 ringgit ($952.08) a tonne by the midday break.
Palm has plunged 10.5% for the week so far, its fourth weekly loss in five, in anticipation of rising June inventories and higher export volumes from Indonesia.
“Palm futures sustained the gains from yesterday spurred by bargain buying and a solidly higher Dalian market,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
However, sporadic policy announcements from Indonesia on accelerating exports could destabilize the current price consolidation, Varqa added.
Indonesia plans to implement a 35% palm oil mix in biodiesel by the end of the month, CNBC Indonesia said, citing official.
The world’s largest palm oil producer is considering cutting its palm oil export levy to encourage more shipments, a cabinet minister said on Thursday, another move to spur exports after a ban designed to protect domestic cooking oil supplies saw palm oil inventories swell.
Malaysia’s palm oil board (MPOB) is scheduled to release highly watched June supply and demand data next week, while a Reuters poll pegged end-June inventories to jump 12.3% from the previous month.
In related oils, Dalian’s most-active soyoil contract DBYcv1 rose 3.1%, while its palm oil contract DCPcv1 gained 4.4%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 1.5%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Elsewhere, two of the Federal Reserve’s most vocal hawks on Thursday said they would support another 75 basis-point interest rate increase later this month but a downshift to a slower pace afterward, even as both downplayed the risk of higher borrowing costs pushing the U.S into recession.
The Malaysian bourse will be closed on Monday for a public holiday.
