Crude palm oil futures in Malaysia expected to hold gains

CapitaLand Mall Trust building in Singapore’s Bugis neighborhood.CapitaLand Mall Trust building in Singapore’s Bugis neighborhood.

Palm oil futures on the Bursa Malaysia Derivatives exchange are expected to hold gains on Wednesday on a tighter production forecast for this year and as Indonesia ramps up use of biodiesel next month.

Bursa Malaysia front-month palm oil futures for November rose 1.5 percent to 2,232 ringgit ($543.73) a metric ton on Tuesday on volumes of 46,743 lots of 25 metric tons each.

Futures rose after noted edible oil analyst Thomas Mielke reportedly made a bullish prediction on prices at a Kuala Lumpur industry event on Tuesday. Mielke said that Malaysian output would dip to 19.8 million metric tones in 2018, according to Reuters, from 19.92 million metric tons last year, lowering an earlier forecast of 20.2 million metric tons for 2018.

The comments offset bearish news earlier this week that exports of Malaysian palm oil products for Aug. 1-25 fell 13.6 percent to 786,947 metric tons from 910,774 tonnes shipped during July 1-25, cargo surveyor Societe Generale de Surveillance said on Monday.

Mielke also said Malaysian production would increase to 20.4 million metric tons in 2019.

The market is also looking ahead to the Sept. 1 start of higher levels of mandated biofuels use in Indonesia. Indonesia in August said it would require all diesel fuel to contain biodiesel starting from the beginning of September. Indonesia’s currently mandates a 20 percent bio-content in biodiesel for subsidized diesel users.

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