Palm flat as strong rival oils, El Nino fears counter firm ringgit

KUALA LUMPUR: Malaysian palm oil futures were little changed on Tuesday, after rising in the previous session, as stronger rival edible oils and concerns over potential El Nino-related production disruptions offset a firmer ringgit.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange fell 1 ringgit, or 0.02%, to 4,549 ringgit ($1,118.51) a metric ton at the close.

Stronger soybean oil and Dalian palm olein prices lifted market sentiment, while concerns over El Nino weather risks in the coming months, which may disrupt production patterns in the country, further supported the market, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.

Dalian’s most-active soyoil contract rose 1.31%, while its palm oil contract added 1.53%. Soyoil prices on the Chicago Board of Trade were up 0.14%.

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 as reports of attacks on vessels near the Strait of Hormuz revived fears of disruptions to shipping through the critical energy transit route.

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

The ringgit, palm’s currency of trade, strengthened 0.37% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.

Indonesian state planter PT Agrinas Palma Nusantara plans to open biodiesel and bioethanol plants to support the government’s renewable energy agenda, while adding soybean and cassava to its portfolio, its chief executive said on Monday.