Palm oil to gain for the first time in three months
The price of palm oil futures in Malaysia rose on Friday, and was set to rise for the first time monthly in three months. This was boosted by higher rival oil contracts. Traders were also waiting on news from Indonesia and India regarding export and import tax.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for November delivery rose 50 ringgit or 1.27% to $3,990 ringgit ($925.75).
The contract is up 3.18% this week and 2.1% in the last month.
Lingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that the palm market tracks the rise in Chicago oil and Dalian oils. There is also a sudden surge in cash buying. Overall sentiment is strong, as buyers buy on dips.
Dalian's palm oil contract, which is the most active contract, grew by 1.3%. Chicago Board of Trade soyoil prices rose by 0.9%.
As they compete to gain a share of the global vegetable oil market, palm oil monitors price movements for related oils.
Lingam said that the market also expects Indonesia to raise its reference price by September.
By the end of September, Indonesia's top producer will set its palm oil export tax and reference price for the month.
India, a major importer of palm oil, is looking at increasing import taxes for vegetable oils. This could reduce demand and decrease overseas purchases.
The Malaysian Ringgit, the palm oil's trade currency, fell 0.15% in value against the US dollar. Palm oil becomes more appealing to foreign currency holders when the ringgit is weaker.
Investors weighed Middle East supply concerns, but signs of weakening demand limited gains.
Palm oil is a better option as a biodiesel source because crude oil futures are stronger. $1 = 4.3100 Ringgit (Reporting and editing by Varun H K, Sonia Cheema).
(source: Reuters)
