Palm futures are flat due to rising production and a strong Ringgit, which offset the boost from rival oils

Malaysian palm oils futures were little changed Thursday, as participants awaited clues from vegetable oil competitors. However, a strong Ringgit and increasing production limited gains.

At closing, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for July delivery fell 1 ringgit or 0.02% to 4,036 Ringgit ($923.57) per metric ton.

Early trade saw the contract fluctuate between 4,005 and 4,054 Ringgit per ton, after closing last session at 4,037 Ringgit.

A Kuala Lumpur based trader stated that "Today crude Palm Oil Futures is still consolidating, after yesterday's supportive news about demand from India and the rising production of Malaysian Palm Oil Association", adding that the market was awaiting additional cues.

The trader stated that the rally in prices may be capped by rising production, and the stronger Malaysian Ringgit, which is the currency used for trade contracts.

The ringgit gained 0.41% against U.S. dollars on Thursday, making it less attractive to foreign currency holders.

Dalian's palm oil contract, which is the most active contract in Dalian, gained 0.98%. Chicago Board of Trade Soyoil Prices rose by 0.62%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks price changes of competing edible oils.

Four dealers said that India had increased its palm oil purchases following a five-month hiatus. A correction in the price of palm oil made it cheaper than soyoil rivals, which encouraged refiners place orders to replenish their inventories.

According to Wang Tao, technical analyst, palm oil could retrace to a range between 3,929 and 3,968 Ringgit per metric tonne, after failing to break through resistance at 4,072 Ringgit.

(source: Reuters)