KUALA LUMPUR: Palm oil futures surged to their highest level since June last year at RM2,359 a tonne on Wednesday as a Chinese decision to waive retaliatory tariffs on purchases of US soybeans boosted prices of rival soybean oil.
The market is supported by the runup in soyoil futures on the Chicago Board of Trade and the Dalian Commodity Exchange following news that China granted the licences, said Sathia Varqa, owner of Palm Oil Analytics in Singapore.
US soybean and soyoil prices rose overnight after China granted a fresh round of waivers for 10 million tons of American beans.
Exemptions were issued to Chinese state-owned and private crushers as well as multinational processors based in the nation, people familiar with the matter told Bloomberg.
There’s also optimism that biodiesel blending in Malaysia and Indonesia will increase, starting next year, said Rajesh Modi, a trader at Sprint Exim Pte in Singapore.
Primary Industries Minister Teresa Kok said on Tuesday that implementation of the 20% biodiesel blending mandate in Malaysia will boost local consumption of palm-biofuel to 1.3 million tons a year.
The market is getting help too from data showing palm exports to China from Malaysia, the second-biggest producer, surged about 42% from a month earlier to 164,838 tons in the first 20 days of October, according to estimates by independent cargo surveyor SGS Malaysia Sdn Bhd.
China could potentially buy more palm oil from Malaysia if prices fall due to trade frictions between India and the Southeast Asian nation, Oscar Tjakra, senior analyst for grains and oilseeds at Rabobank, said on Tuesday.
Traders and investors remained cautious as an influential Indian processors’ group has asked members to refrain from buying from Malaysia because of critical comments by Prime Minister Tun Dr Mahathir Mohamad over Kashmir.- Bloomberg
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