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Asia Biofuels Update: Palm Oil Recovers on Stronger Soybean Oil, Exports

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Malaysian palm oil futures partially recovered on Monday as rival soybean oil rose and as robust exports provided support despite a strengthening local currency.

The Bursa Malaysia Derivatives' July crude palm oil contract firmed 0.47% to 4,525 Malaysian ringgit ($1,113.65) per metric ton. The August crude palm oil contract gained 0.40% to 4,557 ringgit/mt.

Cargo surveyors reportedly estimated Malaysian shipments for the June 1-25 period to have risen between 10.6% and 11.1% from a month earlier.

Exports grew despite increasing costs to foreign buyers as Malaysian ringgit continued to strengthen against the US dollar for a fifth consecutive session on Monday.

However, market intelligence firm SunSirs said that growth in shipments is narrowing, as the recent numbers followed a 19.1% to 25.0% jump during the June 1-20 period.

"This slowdown indicates weakening export momentum and reduced support from the demand side, exerting moderate bearish pressure on palm oil spot prices," SunSirs said.

In key buyer China, "domestic palm oil demand remains largely for essential needs," according to price reporting agency MySteel.

Top importer India, meanwhile, was reportedly estimated to have imported more than 600,000 metric tons of palm oil this month, up from 549,356 mt in May.

Export dynamics may be influenced by Indonesia's B50 biodiesel mandate, set for implementation on July 1, as this will expand domestic biofuel use and consequently reduce exportable supplies.

Analysts expect palm oil prices to remain supported as a result, particularly amid prospects of lower supplies from a developing El Nino weather phenomenon.

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