JAKARTA: Malaysian palm oil futures inched higher on Tuesday, snapping three consecutive sessions of losses, mirroring movement in crude oil and Chicago soyoil, but concern over high Malaysian palm oil stocks capped gains.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange gained 2 ringgit or 0.05% to 4,187 ringgit ($932.72)a metric ton at closing.
The contract rose as much as 2.27% early in the session, however palm oil “struggled to stay upbeat on weak fundamental factors,” a Kuala Lumpur-based trader said, noting the expectation of a higher stock level in March.
Malaysia’s palm oil stocks likely rose for the first time in six months in March as production recovered, a Reuters survey showed on Friday, although global demand remains sluggish amid tariff concerns.
Indonesia, the world’s largest palm oil producer and exporter, will adjust its CPO export tax to reduce the burden on exporters from U.S. tariffs, Finance Minister Sri Mulyani Indrawati said on Tuesday.
Palm oil mirrored the rebound in the energy market and U.S. soyoil prices - Brent futures LCOc1 were up 0.2%, and soyoil prices on the Chicago Board of Trade (CBOT) gained 0.55%.
Malaysian palm oil extends losses
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. Palm oil also tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Meanwhile, Dalian’s most-active soyoil contract fell 0.83%, while its palm oil contract slipped 0.48%.
The ringgit, palm’s currency of trade, hovered near its weakest level over two months against the U.S. dollar, making the commodity cheaper for buyers holding foreign currencies.
Palm oil may retest resistance at 4,269 ringgit per metric ton, a break above which could lead to a gain into the 4,323-4,362 ringgit range.
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