Palm rises on bargain buying, high stocks cap gains

JAKARTA: Malaysian palm oil futures rose on Thursday on bargain buying, but a gradual build-up in Malaysian and Indonesian stocks amid sluggish demand and weakness in rival edible oils in the Dalian Commodity Exchange capped gains.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange gained 5 ringgit, or 0.11%, to 4,606 ringgit ($1,131.70) a metric ton at closing.

“Crude palm oil futures is trading within the range of 4,500-4,700 ringgit per ton, thus trade below 4,600 ringgit attract buying interest,” a Kuala Lumpur-based trader said.

Relatively higher palm oil stocks in top producers Indonesia and Malaysia are weighing on the contract, said Anilkumar Bagani, commodity research head at Sunvin Group, a Mumbai-based brokerage.

Indonesia’s palm oil inventory rose 18.9% on a monthly basis in May after exports plunged, while Malaysian palm oil stocks climbed to a four-month high in June as a recovery in production outpaced demand growth.

“The delay in release of allocations for B50 biodiesel mandate from Indonesia and the European deforestation policy is affecting palm oil prices,” Bagani said.

Malaysian palm oil exports for July 1-15 likely rose between 4% and 12.4% from a month earlier, cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia said.

Dalian’s most-active soyoil contract declined 0.34%, while its palm oil contract dropped 0.71%. Soyoil prices on the Chicago Board of Trade were up 0.18%.

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

Malaysia has raised its August crude palm oil reference price to a level that maintains the export duty at 10%, a circular on the Malaysian Palm Oil Board website showed.

Palm oil may revisit its July 9 high of 4,630 ringgit per ton, as it is about to break a falling trendline, Reuters technical analyst Wang Tao said.