KUALA LUMPUR: Malaysian palm oil futures edged higher on Friday for a second consecutive session, as easing recession concerns boosted edible oil prices, but the contract logged a sharp weekly drop.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 23 ringgit, or 0.56%, to 4,163 ringgit ($940.79) a tonne.
Palm plunged 11.6% 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, the world’s largest palm oil producer, on accelerating exports could destabilize the current price consolidation, Varqa added.
Palm closes at one-year low as recession fears knock commodities
Indonesia aims to implement a 35% palm oil mix in biodiesel, known as B35, by the end of the month to help absorb excess palm oil supply, senior energy ministry official Dadan Kusdiana said.
The country has introduced a slew of policy changes to spur exports after a ban designed to protect domestic cooking oil supplies saw 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 rose 3.1%, while its palm oil contract gained 4.6%. Soyoil prices on the Chicago Board of Trade were up 0.8%.
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.