FX.co ★ Palm Oil Jumps to Highest in Over a Year on Crude Oil Rally

Malaysian palm oil futures jumped more than 7% to around MYR 4,680 per tonne on Monday, advancing for a third straight session and reaching their highest level in over a year. The rally was underpinned by expectations that surging crude oil prices will bolster demand for biodiesel feedstocks, as well as support from a weaker ringgit and stronger prices for edible oils on the Dalian and Chicago exchanges.

Demand prospects improved after February imports by top buyer India rose 10.1% month-on-month to a six-month high, helped by wider price discounts relative to rival vegetable oils. At the same time, a Reuters survey suggested Malaysian palm oil inventories likely declined for a second consecutive month in February, falling to a four-month low.

In China, another major buyer, consumer prices increased in February on the back of Lunar New Year demand, which could help support food consumption and, in turn, palm oil usage. However, further gains in prices were tempered by estimates from cargo surveyors indicating that Malaysia’s palm oil exports in February fell by 21.5%–22.5% from January, despite restocking ahead of Eid al-Fitr.

Market participants are now awaiting data from the Malaysian Palm Oil Board, due later this week, for clearer indications on supply dynamics and inventory levels.