JAKARTA: Malaysian palm oil futures rose on Wednesday, recouping losses from the previous session, underpinned by gains in rival Chicago soyoil, stronger crude oil prices and a weaker ringgit.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange gained 45 ringgit, or 1.08%, to 4,208 ringgit ($990.58) a metric ton by the midday break.
“The futures opened gap higher today, following a resurgent movement in Chicago soyoil, ICE Canola and in Euronext Rapeseed futures Tuesday overnight and an uptick in Asian hour today for Chicago soyoil and energy prices,” said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
Soyoil prices on the Chicago Board of Trade (CBOT) added 0.77%. Dalian’s most-active soyoil contract rose 0.4%, while its palm oil contract slightly slipped 0.07%.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices rose, boosted by expectations of firm summer demand in the world’s two largest consumers, the U.S. and China, though gains were capped by analysts’ caution about the wider economy.
Palm trades lower on profit-taking, market awaits export data
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, weakened 0.21% against the dollar, making the commodity cheaper for holders of foreign currencies.
Independent inspection company AmSpec Agri Malaysia estimates exports of Malaysian palm oil products for the July 1-15 period to have fallen 5.3% compared with the June 1-15 period, while cargo surveyor Intertek Testing Services predicts a 6.2% drop.
Palm oil may retest resistance at 4,231 ringgit per metric ton, a break above which could lead to a gain into the 4,254-4,292 ringgit range, Reuters technical analyst Wang Tao said.
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