Palm gains on stronger soyoil, tight market supplies

KUALA LUMPUR: Malaysian palm oil futures were in line for their first gain in four sessions in early trade on Thursday, tracking stronger edible oils and on tighter supplies, according to traders.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was up 0.4 percent to 2,648 ringgit ($617.11) at the midday break. It reversed losses made in the previous trading session, when it fell to a low of 2,608 ringgit, its weakest since Aug. 8.

Traded volumes stood at 12,347 lots of 25 tonnes each at noon.

"There is some buying going on in the market, it could pick up more later in the month," said a trader from Kuala Lumpur. "Crude palm oil (supplies) have tightened... despite the good production numbers."

Palm oil output in July saw a stronger-than-expected surge, up 20.7 percent to 1.83 million tonnes from the previous month. The output levels were the highest in almost two years, while monthly gains were the strongest since March 2015.

The market was also up tracking gains in soyoil on the Chicago Board of Trade, another futures trader added.

Palm oil prices are impacted by the movements in related edible oils including soy, as they compete for a share in the global vegetable oils market.

The October soybean oil contract on the Chicago Board of Trade is in line for a second day of gains, and was last up 0.3 percent on Thursday.

In other related oils, the January soybean oil on the Dalian Commodity Exchange rose 0.2 percent, while the January palm olein contract was also up 0.4 percent.

Palm oil may retrace towards a support at 2,614 ringgit per tonne, following its failure to break a resistance at 2,687 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.