Palm rises on stronger Chicago soyoil, crude oil

JAKARTA: Malaysian palm oil futures rose on Tuesday, tracking higher Chicago soyoil and crude oil prices, while a weaker ringgit also added support.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange gained 38 ringgit, or 0.93%, to 4,132 ringgit ($1,000.48) a metric ton by the midday break.

“CPO opened higher in the morning session on news of China’s purchases of US soybeans, and sentiment was also lifted by higher crude oil prices,” said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Chicago soybean futures edged higher as traders assessed the pace of US soybean purchases by top buyer China following a trade truce between Beijing and Washington in late October.

Dalian’s most-active soyoil contract barely changed, up 0.05%, while its palm oil contract rose 0.72%. Soyoil prices on the Chicago Board of Trade added 0.5%.

Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Crude oil prices held firm in early trading on Tuesday as market participants assessed risks stemming from Ukrainian drone strikes on Russian energy sites, mounting US-Venezuela tensions and mixed expectations for US fuel inventories.

Malaysian ringgit, palm’s currency of trade, eased 0.1% against the US dollar on the day, making the contract cheaper for foreign currency holders.

Indonesia’s largest palm oil association GAPKI said on Monday it saw no major impact yet on palm oil production after the island of Sumatra was devastated by floods.

Palm oil may retrace into the 4,013-4,041 ringgit per metric ton range, as it failed to break resistance at 4,121 ringgit.