Palm gains on firm Dalian; weak crude, high stocks limit upside

KUALA LUMPUR: Malaysian palm oil futures rose for a second consecutive session on Thursday, driven by stronger rival Dalian oils, though weaker crude, higher stocks, and profit-taking capped the gains.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 26 ringgit, or 0.59%, to 4,436ringgit ($1,089.93) a metric ton by the midday break.

The market traded higher following bullish rallies in rival Dalian during Asian trading hours as well as overnight Chicago soyoil futures, said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

However, Bagani said weaker energy prices and Malaysia’s heavy inventories triggered profit-taking at a key technical resistance zone.

Dalian’s most-active soyoil contract rose 0.21%, while its palm oil contract added 1.44%.

Soyoil prices on the Chicago Board of Trade were down 0.28%.

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

Oil prices fell more than $1 per barrel as easing concerns over an escalation of conflict in the Middle East reduced the risk premium in crude markets, while rising OPEC+ output and growing US inventories fed worries about oversupply.

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

The ringgit, palm’s currency of trade, weakened 0.25% against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.

Palm oil may test a resistance zone of 4,471 to 4,489 ringgit per metric ton, a break above which could lead to a gain into the 4,519-4,567 ringgit range, Reuters technical analyst Wang Tao said.