Palm rises on firmer Chicago soyoil, weak ringgit

KUALA LUMPUR: Malaysian palm oil futures traded higher on Wednesday, reversing early losses as firmer Chicago soyoil and a weaker ringgit supported the market.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange rose 29 ringgit, or 0.64%, to 4,575 ringgit ($1,118.58) a metric ton by the midday break.

The market is supported by a rebound in rival soyoil during the Asian morning session and a slightly weaker ringgit a Kuala Lumpur-based trader said.

The ringgit, palm’s currency of trade, weakened 0.2% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Soyoil prices on the Chicago Board of Trade were up 0.29%. Dalian’s most-active soyoil contract fell 0.3%, while its palm oil contract shed 0.45%.

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 on concerns that a breakdown in discussions between Iran and the U.S. for a final agreement to end their war may extend supply disruptions in the key Middle East producing region.

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

Indonesia has set its July reference price for crude palm oil at $1,000.90 per ton, a trade ministry regulation showed.

Indonesia will start its national B50 fuel mandate, a blend of 50% palm-based diesel and 50% conventional diesel, on Wednesday as part of its push for energy independence, but slumping oil prices and costlier palm oil threaten its viability, analysts say.

Palm oil may test support at 4,513 ringgit per ton, a break below which could trigger a fall into the 4,466-4,485 ringgit range, Reuters technical analyst Wang Tao said.