SINGAPORE: Malaysian palm oil futures rose for a second consecutive session on Tuesday amid hot weather in key producer Malaysia, while strong export data and firmer rival oil prices lent support.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 66 ringgit, or 1.67%, at 4,010 ringgit ($839.61) a metric ton by the midday break.
Bad weather in Malaysia has contributed to higher prices, said Mitesh Saiya, trading manager at Kantilal Laxmichand & Co, adding that “good” palm oil exports lifted sentiment.
Malaysia’s meterological agency issued Level 1 hot weather alerts in over 10 areas on Monday evening. Hot weather negatively affects palm yields.
Palm oil exports from top exporter Indonesia are expected to recover in April, after shipments in March and February fell below the monthly average over the past year, the trade ministry said on Monday.
Dalian’s most-active soyoil contract climbed 2.52%, while its palm oil contract increased 2.09%. Soyoil prices on the Chicago Board of Trade rose 0.92%.
Palm oil surrenders gains amid higher expected production, weaker oil
Soyoil climbed amid higher soybean prices on concerns over Argentine crops and attacks on a Ukrainian grains port.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices edged higher on Tuesday, after falling in the previous session, as investors continued to assess the risk from geopolitical concerns in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, weakened 0.02% against the dollar.
Malaysia has maintained its export tax for crude palm oil at 8% for May and raised its reference price, a circular on the Malaysian Palm Oil Board’s website showed on Tuesday.
Palm may rise this week towards the resistance levels of RM3,990-4,000 per ton this week, with support at RM3,840-3,860 per ton, LSEG said in a report published on Monday.
Palm oil may bounce to 4,039 ringgit per ton, around the peak of a wave 4, said Reuters technical analyst Wang Tao.