KUALA LUMPUR: Malaysian palm oil futures extended a rally on Thursday to a fifth straight session, as heavy rains in Southeast Asia and Russia’s threat to reject a Black Sea exports agreement stoked worries over global supply.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 7 ringgit, or 0.17%, to 4,125 ringgit ($873.02) a tonne by the midday break, touching its highest level in seven weeks.
Concerns over rainy weather triggered reduced production in top producers Indonesia and Malaysia, as well as fears of higher Indian import taxes helped supported prices.
There are also worries over availability of Black Sea sunflower oil exports as the grain corridor deal between Russia and Ukraine are uncertain, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Russia’s Deputy UN Ambassador Dmitry Polyanskiy on Thursday told reporters he was not optimistic about the renewal of a UN-brokered deal that resumed Ukraine’s Black Sea exports of grain and fertilizer. Dalian’s most-active soyoil contract rose 0.7%, while its palm oil contract gained 1.9%.
Soyoil prices on the Chicago Board of Trade were up 0.4%. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The ringgit, palm’s currency of trade, fell 0.15% against the dollar, making it cheaper for buyers holding foreign currency.
Palm oil may hover below 4,071 ringgit
“The export demand from destinations like Europe, India and Pakistan continued to be there due to a wider palm oil discount over competing edible oils, but Malaysia’s export pace is easing due to Indonesia’s lower export taxes and export levy waiver,” Bagani added.
Palm oil may test a resistance zone of 4,184-4,194 ringgit per tonne, with a good chance of breaking above this range and rising to 4,253 ringgit, Reuters technical analyst Wang Tao said.
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