Palm oil climbs to five-week high

Malaysian palm oil futures rose as much as 1 percent on Friday to their highest in more than five weeks, tracking gains in related edible oils and crude oil, while a weaker ringgit also lent support. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange, however, pared some gains to end the day up 0.7 percent at 2,450 ringgit ($617.13) a tonne.
Earlier in the session, it rose as much as 1.2 percent to 2,462 ringgit, its highest since April 10. Palm has added 2.9 percent this week in its second straight weekly gain. Trading volume stood at 38,919 lots of 25 tonnes each on Friday evening. "The palm market is up on soyaoil's upward move last night and a strong Dalian this morning," said a Kuala Lumpur-based trader, adding that West Texas Intermediate (WTI) futures briefly going above $72 and Brent crude futures above $80 also brought about some buying.
Palm oil prices are impacted by movements in crude oil, as the edible oil is used as feedstock to make biodiesel. Crude oil prices held firm on Friday on strong demand, supply cuts led by the Organization of the Petroleum Exporting Countries, and looming US sanctions against oil exporter Iran. A weaker ringgit could have supported palm, said another trader, as weakness in the Malaysian currency makes the vegetable oil cheaper for foreign buyers.
The ringgit, palm's currency of trade, weakened for a fourth straight session and was down 0.1 percent at 3.9700 per dollar. In other related oils, the Chicago July soyabean oil contract was up 0.7 percent following a 1.1 percent gain on Thursday. The September soyabean oil on China's Dalian Commodity Exchange was up 1.4 percent and the Dalian September palm oil contract rose 1.5 percent.
Palm oil is also impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market. Palm oil may break a resistance at 2,459 ringgit per tonne and rise to the April 6 high of 2,510 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.