SINGAPORE: Malaysian palm oil futures rose for the second straight session on Friday, posting their first monthly gain in three months, as firmer rival oil contracts lent support to the market, while traders awaited news from India and top producer Indonesia on import and export taxes.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange closed 38 ringgit, or 0.96%, higher at 3,978 ringgit ($920.83) a metric ton.
The contract gained 2.87% week-on-week and 1.79% for the month, logging its first monthly rise since June. The palm market is tracking the rise in Chicago soyoil and Dalian oils higher, while there is a sudden buying in the cash market, and overall sentiment remains strong as buyers are actively buying on dips, said Lingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari. Dalian’s most active soyoil contract climbed 1.73%, while its palm oil contract advanced 1.03%. Soyoil prices on the Chicago Board of Trade added 0.57%.
Palm oil tracks price movements in related oils as they compete for a share in the global vegetable oils market. Meanwhile, the market is also expecting Indonesia to increase its reference price in September, Lingam added.
Indonesia is due to set its palm oil reference price and export tax and levy for September by the end of the month. Key importer India is considering a hike in import taxes on vegetable oils, which could weaken demand and reduce overseas purchases of palm oil.
The Malaysian ringgit, palm’s currency of trade, weakened 0.19% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
Oil prices edged higher on Friday and were on track for a weekly gain as Libyan output disruptions and Iraqi plans to curb production raised supply concerns, while data showing the US economy grew faster than initial estimates eased recession fears. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
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