Palm steady, set for weekly gain on short covering

KUALA LUMPUR: Malaysian palm oil futures edged up slightly on Friday and remained on track for its first weekly gain in four, as investors covered their short positions to provide support to the market.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 2 ringgit, or 0.04%, to 4,448 ringgit ($1,055.28) a metric ton by the midday break.

The contract has risen 1.36% so far this week.

Crude palm oil prices extended its rally for a third straight day, likely driven by short coverings, a Kuala Lumpur-based trader said.

Soyoil prices on the Chicago Board of Trade were up 0.2%.

The Dalian Commodity Exchange is closed from October 1 to 8 on account of public holidays. Palm oil tracks rival edible oils’ prices as it competes for a share of the global vegetable oils market.

Oil prices rose slightly after four straight sessions of declines but were on track for their steepest weekly decline since late June due to market expectations that the OPEC+ group could hike output further despite oversupply concerns.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, weakened 0.29% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Indonesia’s state palm oil company Agrinas Palma Nusantara plans to develop a biofuel production complex in the Papua region to produce biodiesel entirely from palm oil, a company director said in an interview with CNBC Indonesia.

Meanwhile, the Indonesian trade ministry urged the European Union to adopt a World Trade Organization panel ruling to remove countervailing duties on Indonesian biodiesel imports.