After a 2-session rally, VEGOILS - Palm trades lower as profit booking occurs
Malaysian palm futures fell on Tuesday, as investors took profits after two sessions with sharp gains due to lower palm oil inventories and rising oil price.
By midday, the benchmark March palm oil contract on Bursa Derivatives Exchange had fallen 4 ringgit or 0.09% to 4,496 Ringgit ($999.11).
The market is at a crucial juncture with a bullish momentum fueled by rising oil prices and lower palm oil inventories. The market is still being held back by concerns about the palm oil price premium compared to soybean oil, said Darren Lim of Phillip Nova, a Singapore-based brokerage.
Malaysian Palm Oil Board data showed that Malaysian palm oil stocks fell for the third consecutive month in December 2024. They dropped 6.91%, to 1.71 millions metric tons. Crude palm oil production also declined 8.3%, and exports plummeted 9.97%.
The cargo surveyors estimate that Malaysian palm oil exported fell between 21.4% to 26.8% from the month prior during the period Jan. 1-10.
The market was primarily focused on the impact of new U.S. sanctions against Russian oil.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
China's soybean meal and oil futures posted their largest daily gain since 2023, while rapeseed and palm oil contracts also rose, following a rally that occurred in the Chicago Soy Complex after the release of U.S. Department of Agriculture crop data.
The Chicago Board of Trade soyoil price fell by 0.57%. Dalian's palm oil contract and soyoil contract, which are the most active contracts in Dalian, both rose by 0.71%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.
The Malaysian Ringgit, the palm industry's trade currency, increased 0.18% to the U.S. Dollar, making the commodity more expensive for foreign-currency buyers.
According to Wang Tao, a technical analyst, palm oil is still aiming for 4,646 ringgit a ton. This would be the peak of wave B.
(source: Reuters)
