KUALA LUMPUR: Malaysian palm oil futures rallied on Friday, as Russia’s threats to pull out of an agreement on Black Sea grain exports raised concerns over global edible oil supply, although the contract was set for a weekly loss.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 131 ringgit, or 3.57%, to 3,796 ringgit ($808.00) a tonne by the midday break. The contract had fallen 1.9% on Thursday. For the week, palm has declined 1% so far.
Moscow has submitted concerns to the United Nations about an agreement on Black Sea grain exports, and is prepared to reject renewing the deal next month unless its demands are addressed, Russia’s Geneva UN ambassador told Reuters on Thursday.
This has sparked buying, as a cancellation of the agreement could affect Black Sea sunflower oil supply and create volatility in markets, Mitesh Saiya, trading manager at Mumbai-based trading firm Kantilal Laxmichand & Co.
“Monsoon season rains in Indonesia and Malaysia will put pressure on production, as we may see flooding from November to January, which may deteriorate the quality of crude palm oil,” he added.
Dalian’s most-active soyoil contract rose 1.4%, while its palm oil contract gained 0.3%. Soyoil prices on the Chicago Board of Trade rose 0.3%, extending gains for a third session.
Palm oil is affected by price movements in related oils, as they compete for a share in the global vegetable oils market.
Palm oil ends higher on widening discounts, weaker ringgit
The ringgit, palm’s currency of trade, fell 0.17% against the dollar, making the commodity cheaper for holders of foreign currency.
India’s palm oil imports in September had jumped to their highest in a year, boosted by strong demand ahead of the peak festival season and a steep discount to rival oils, the Solvent Extractors’ Association of India said on Thursday.
Palm oil is poised to break a resistance at 3,754 ringgit per tonne, and rise into a range of 3,824-3,919 ringgit, Reuters technical analyst Wang Tao said.