Palm gains over 2% on firmer soyoil, softer stock build

KUALA LUMPUR: Malaysian palm oil futures rose more than 2% on Wednesday, snapping six sessions of losses, supported by firmer soyoil and key industry data that showed stocks rose less than expected.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 107 ringgit, or 2.51%, to 4,363 ringgit ($1,076.22) a metric ton by the midday break.

The market rallied after stronger overnight soybean oil prices and a smaller-than-expected buildup in Malaysian inventories following the latest Malaysian Palm Oil Board report, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

“However, market sentiment remains sensitive to movements in soybean oil and export pace,” he added.

Malaysia’s palm oil stocks climbed to a record high in October, surpassing the peak set a month earlier, as another month of bumper output outweighed a rebound in exports.

However, the figure was lower than expectations of a stock high of 3.75 million tons in a Reuters survey.

Meanwhile, cargo surveyors estimated that Malaysian palm oil product exports for November 1-10 fell between 1.9% and 2.3% from a month earlier.

Dalian’s most-active soyoil contract rose 1.16%, while its palm oil contract added 2.32%.

Soyoil prices on the Chicago Board of Trade were up 0.72%.

Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

The ringgit, palm’s currency of trade, weakened 0.44% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Oil prices rose from the previous session’s two-month lows, as the market swung between hopes for a de-escalation in the US-Israeli war on Iran and concerns about attacks on shipping in the Strait of Hormuz.

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