Palm oil extends gains on rival oil strength, weaker ringgit

JAKARTA: Malaysian palm oil futures rose for a second straight session on Monday and ended at its highest closing in nearly three weeks, supported by stronger Dalian and Chicago edible oils and a weaker ringgit, although gains were capped by crude oil weakness.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange (BMDE ) climbed 25 ringgit, or 0.54%, to 4,671 ringgit ($1,126.63) a metric ton at closing.

The contract rose to 4,703 ringgit earlier in the session, its highest level since May 6, before trimming gains.

“Palm rose on weaker ringgit and supportive Chicago soyoil, but gains were capped by crude oil weakness,” said a Kuala Lumpur-based trader.

Soyoil prices on the Chicago Board of Trade were up 0.89%. The palm oil contract on the Dalian Commodity Exchange gained 0.45%, while the most-active soyoil contract was down 0.07%.

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

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

Exports of Malaysian palm oil products for June 1 to 20 rose 19.1% from a month earlier, cargo surveyor Intertek Testing Services said, while independent inspection company AmSpec Agri Malaysia said shipments over the same period rose 25% on a monthly basis.

Brent crude prices fell about 2% after U.S.-Iran talks concluded in Switzerland with Tehran saying it had secured waivers for oil and petrochemical exports, easing worries about a supply shortage in global markets.

Lower crude oil futures make palm a less attractive option for biodiesel feedstock.