Palm flat as El Niño fears counter rising stock levels; still poised for second weekly gain

KUALA LUMPUR: Malaysian palm oil futures traded in a tight range on Friday, as pressure from higher inventories countered concerns over El Niño’s impact on production and firmer crude oil prices.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was up 3 ringgit, or 0.06%, at 4,727 ringgit ($1,158.01) a metric ton by the midday break.

The contract has risen 1.03% so far this week and is on track for a second weekly gain.

Prices were pressured by higher end-July stocks and weaker Chicago soyoil but concerns over El Niño-related weather disruptions and higher energy prices limited the losses, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd. Malaysia’s palm oil stocks rose to a five-month high in July as production remained above rising export demand, data from the Malaysian Palm Oil Board showed on Monday.

Dalian’s most-active soyoil contract rose 0.6%, while its palm oil contract added 0.78%.

Soyoil prices on the Chicago Board of Trade were down 0.09%.

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

Oil prices inched up after the United States threatened an indefinite naval blockade of Iran, reviving concerns about the supply of crude after the previous session’s fall on a weaker outlook for demand and a large build in US stocks.

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

The ringgit, palm’s currency of trade, strengthened 0.12% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.

India’s edible oil imports rose to their highest level in 10 months in July as refiners stepped up purchases of palm oil and soyoil to replenish inventories ahead of the festival season, Solvent Extractors’ Association of India said.