KUALA LUMPUR: Malaysian palm oil futures rebounded on Wednesday, ending three straight sessions of losses, buoyed by bargain buying activity and expectations of tighter output in the coming months.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose 38 ringgit, or 0.87 percent, to 4,390 ringgit (USD1,044.00) a metric ton at close. There is significant buying activity at the lower price levels and substantial crude palm oil purchasing at destination markets, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“With production showing no signs of recovery, at least not in the fourth quarter due to seasonal factors, coupled with sustained demand, prices should remain resilient in the long run,” he added.
The annual festival season in India, the world’s largest vegetable oil buyer, runs from late September to early November. “Exports are expected to rise in the coming months on festive season demand,” Ahmad Parveez Ghulam Kadir, director-general at the Malaysian Palm Oil Board, said on Monday. Soyoil prices on the Chicago Board of Trade were up 0.38 percent. The Dalian Commodity Exchange will remain shut from October 1 to October 8 for holidays, and will resume trading on October 9.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market. Oil prices steadied after falling for two days as investors weighed OPEC+ plans for a larger output hike next month while data from the US and Asia showed signs of demand waning. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, strengthened 0.02 percent against the dollar, making the commodity slightly expensive for buyers holding foreign currencies.
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