Palm rises on firmer crude oil prices, Dalian strength

KUALA LUMPUR: Malaysian palm oil futures rose on Wednesday, buoyed by firmer crude oil prices and gains in rival Dalian contracts.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 43 ringgit, or 1.09%, to 4,003 ringgit ($851.88) per metric ton during early trade.

Fundamentals

• Oil prices rose on expectations major producers will maintain production cuts at a meeting this Sunday at the same time fuel consumption should begin rising with the start of the peak summer demand season.

• As of 0042 GMT, Brent crude futures for July delivery rose 27 cents, or 0.3%, to $84.49 a barrel.

• Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

• Dalian’s most-active soyoil contract ticked 0.62% higher, while its palm oil contract added 1.58%. Soyoil prices on the Chicago Board of Trade were down 0.24%.

• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

• Indonesia exported 2.56 million tons of palm oil products in March, up from 2.17 million tons in February, its palm oil association said.

• The ringgit, palm’s currency of trade, weakened 0.15% against the dollar, making the commodity less expensive for buyers holding the foreign currency.

• Palm oil may climb into a range of 4,002 ringgit to 4,025 ringgit per metric ton, as it has broken resistance at 3,949 ringgit, Reuters technical analyst Wang Tao said.