SINGAPORE: Malaysian palm oil futures rose for a third consecutive session on Wednesday amid hotter weather in the key producing country and strength in rival oils, although a stronger ringgit capped gains.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 5 ringgit, or 0.13%, at 3,976 ringgit ($833.02) a metric ton by the midday break.
Palm oil followed bullish momentum in CBOT soyoil futures overnight and in Chinese vegetable oil futures in Asian hours on Wednesday, said Anilkumar Bagani, research head at Mumbai-based vegetable oil broker Sunvin Group.
Dalian’s most-active soyoil contract rose 0.92%, while its palm oil contract increased 0.86%. Soyoil prices on the Chicago Board of Trade dipped 0.02% after rising 0.48% on Tuesday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices were slightly higher on Wednesday after industry data showed a surprise drop in U.S. crude stocks last week, a positive sign for demand, though markets were also keeping a close eye on hostilities in the Middle East.
Palm oil rises on poor weather, exports recovery and stronger rivals
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Malaysia’s meterological agency increased the issuance of Level 1 hot weather alerts to over 20 areas on Tuesday evening. Hot weather negatively affects palm yields.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.1% against the dollar. A stronger ringgit makes palm oil less attractive to foreign currency holders.
Malaysian oil palm smallholders have been urged to replant old oil palm trees, which would maintain the productivity of the country’s oil palm industry, Malaysia-based Bernama reported on Monday.
Palm oil still targets 4,039 ringgit per ton, said Reuters technical analyst Wang Tao.
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