JAKARTA: Malaysian palm oil futures rose on Thursday, narrowing a gap with U.S. soyoil after recent rallies, while higher crude oil prices also lent support.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed 0.73% higher at 4,151 ringgit ($880.76) per tonne. It rose 3.13% earlier in the day before paring some of its gain.
Palm was narrowing its spread with U.S. soy oil prices as the gap was “too wide”, a Kuala Lumpur-based trader said. The rally eased as prices of U.S. soyoil and rival Dalian oils corrected.
Soyoil prices on the Chicago Board of Trade were 0.21% lower. Meanwhile, Dalian’s most active soyoil contract was down 1.15%, while its palm oil contract fell 0.46%.
Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market.
Crude oil prices steadied following a rally of nearly 3% in the previous session, as concerns over slack demand in China balanced optimism from record U.S. crude exports and sign that recession concerns are abating.
Higher crude oil prices make palm oil more attractive as alternative fuel feedstock.
Palm oil may retest a support of 4,114 ringgit per tonne, a break below which could open the way towards 4,001-4,071 ringgit range, Reuters technical analyst Wang Tao said.