Palm oil is gaining on the strong markets of rivals

The futures for Malaysian palm oils rose on Tuesday as a result of the strength of rival oils traded on Dalian and Chicago, while participants awaited further information from an industry meeting in Kuala Lumpur.

By midday, the benchmark contract for palm oil delivery in May on the Bursa Derivatives exchange had gained 52 ringgit or 1.14% to 4,611 Ringgit ($1,045.58) per metric ton.

A Kuala Lumpur based trader stated that "today's crude Palm Oil futures are trading between 4600-4650 due to the firmer Dalian Market while waiting for new lead from the Palm Oil Conference."

Dalian's palm oil contract, which is the most active contract in Dalian, gained 0.35%. Chicago Board of Trade soyoil prices rose by 1.14%.

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

Plantation and Commodities minister Johari Abdul-Ghani stated that Malaysia is looking to increase its palm oil production with high yield varieties, without expanding the planting area, because overseas demand has been increasing after Indonesia, the top palm oil producer, increased the percentage of oil used for biodiesel.

A senior regulatory official said that Malaysia's palm oils stocks will fall to 1.5m metric tons at the end of the month, the lowest level in almost two years. Floods have affected production, and Ramadan has boosted demand.

The head of a trade body has said that palm oil's share in India's annual edible oils imports will drop below soft oil for the first ever time, as its increasing premium over soyoil or sunflower oil forces refiners to look at more affordable alternatives.

As a double-top or flat pattern may be forming, palm oil could fall towards the low of 4,457 Ringgit per metric tonne on February 17.

(source: Reuters)