Palm oil gains for the third consecutive session and logs a weekly gain
The price of palm oil in Malaysia rose for the third consecutive session on Friday, and also logged a gain over the week, thanks to the strength of rival Dalian contracts. However, lower crude oil prices and concerns about demand capped this rise.
The benchmark palm-oil contract for December delivery at the Bursa Derivatives Exchange in Malaysia closed 72 ringgit or 1.86% higher, closing at 3,948 Ringgit ($940.00) per metric ton.
After two weeks of falling prices, the contract rose 3.5% in this week's trading.
Maybank Research analyst Ong Chee Ting stated in a report that the recent strength of Malaysian palm futures has led to them trading at a premium compared to other oils, such as Northwest Europe Sunflower Oil and U.S. Soybean Oil.
"However the current high crude oil palm price is unsustainable, as a larger discount is needed against other major oils to sustain demand, particularly if the industry has pushed its peak production back to Q4."
Dalian's palm oil contract gained 1.46%, while the most active soyoil contract grew by 0.82%. Chicago Board of Trade soyoil prices were down by 0.05%.
As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors the price movement of their competitors.
The oil prices fell on Friday but are on course to gain for the second week in a row following a significant cut in U.S. rates and a decline in global stocks.
Brent futures traded 0.39% lower, at $74.59 per barrel, at 0956 GMT. Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's currency of exchange strengthened by 0.12% against the US dollar, increasing the price for buyers who hold foreign currencies.
Exports of Malaysian Palm Oil Products rose between 6.8% to 10.1% from Sept. 1-20, compared with the same period last month.
Indonesia, the largest palm oil exporter in the world, will introduce new monthly levies to increase its competitiveness with rival edible oils. This was revealed by a regulation released on Thursday by Indonesia's finance ministry.
An industry official said on Thursday that Indonesian palm oil exports will likely decline this year because of increased domestic consumption due to a higher biodiesel blend mandate and a small decrease in production.
(source: Reuters)
