Dalian oil supports palm gains
The price of Malaysian palm oil futures rose on Wednesday due to the strength in Dalian oils and traders' profits made in rival oils.
By midday, the benchmark palm oil contract on Bursa Derivatives exchange for December delivery had risen 27 ringgit (0.68%) to 4,015 Ringgit ($974.51) per metric ton. The contract has increased 7.5% in the last six sessions.
A Kuala Lumpur based trader stated that the Malaysian palm oils futures continue to be on an upward trend as the Chinese stimulus announcement resulted in a continuous strength of Dalian oils.
The trader added, "We also see some profit-taking in long-term contracts of rival oil."
Dalian's palm oil contract grew by 1.23%, while the most active soyoil contract increased by 0.45%. Chicago Board of Trade soyoil prices fell 0.21%.
As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors price changes in their competitors.
Palm's trade currency, the ringgit, has strengthened by 0.6% against U.S. dollars, increasing the price of the commodity for buyers with foreign currencies.
The Indonesian palm oil trade association GAPKI reported that Indonesian palm oil exports dropped 36% in July compared to the same month a year ago, reaching 2.241 million tons.
Oil prices dropped on Wednesday, as investors reassessed whether China's stimulus plan would be able to stimulate the economy sufficiently to increase fuel demand in the world's biggest crude importer.
Brent crude futures were down 0.36 % at $74.90 per barrel as of 0518 GMT.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Technical analyst Wang Tao stated that palm oil could test resistance at 4,067 Ringgit per metric tonne. A break above this level would open the door to the range of 4,120 to 4,153 Ringgit.
(source: Reuters)
