(July 20): Palm oil rose to the highest in nearly a month, tracking renewed strength in crude and other vegetable oil prices as the US and Iran exchanged escalating military strikes.

Futures in Kuala Lumpur rose 0.9% to trade near RM4,635 a tonne, the highest since June 23. That came after Brent crude jumped as the US and Iran ratcheted up hostilities. A week of back-and-forth strikes has expanded beyond strictly military targets to include bridges, utilities and port facilities, suggesting little prospect of a return to the fragile ceasefire signed last month.

The price rise in palm oil was supported by a “resurgence in crude oil price and war risk premium following the escalating situation in the Middle East”, said Sathia Varqa, a senior analyst at Fast Markets Palm Oil Analytics. Vegetable oil futures on the Chicago and Dalian exchanges were also trading sharply higher, which in turn was boosting palm, he added.

However, prices would likely be capped by relatively high palm oil inventories in the world’s two biggest producers, Indonesia and Malaysia, according to Anilkumar Bagani, head of research at Mumbai-based Sunvin Group.

Cargo surveyors’ estimates of Malaysia’s exports over July 1-20 were due later on Monday, with expectations for shipments to continue rising.

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