Palm oil mirrors Dalian competitors; set to gain third week
The price of palm oil in Malaysia rose for the third week running on Friday, as Dalian vegetable oils grew.
Early trade saw the benchmark contract for palm oil for January delivery at Bursa Derivatives Exchange rise 51 ringgit, or 1.03% to 5,003 Ringgit per metric ton, a rise for a third consecutive session.
This week, the contract has gained 2.7%.
The futures opened with a gap and met resistance above 5,000 Ringgit. It remained supported at this level despite the broader vegetable oil rally, indicating a strong bullish mood, said Darren Lim of Phillip Nova, a Singapore-based commodities brokerage.
Dalian's palm oil contract, which is the most active contract, gained 1.65%. Chicago Board of Trade soyoil prices were down by 0.39%.
As palm oil competes to gain a share of the global vegetable oils industry, it tracks the price changes of competing edible oils.
Palm oil is now more expensive to buyers who hold foreign currencies because the ringgit, the palm oil's currency, has strengthened by 0.5% against U.S. dollars.
A Cargill executive said that the demand for palm products in China will drop by 30% compared to a year ago, as high prices have made it less appealing than soyoil. Vegetable oil demand is also stagnant.
Edi Wibowo from the Energy and Mineral Resources Ministry's Directorate of Bioenergy, said at an industry conference that Indonesia is proposing to raise the mandatory blend of palm-oil-based fuel to biodiesel up to 50% by 2028.
Oil prices dropped slightly, as the likelihood of a hurricane affecting U.S. gas and oil production in the Gulf of Mexico decreased. The market also weighed the impact of President-elect Donald Trump’s policies on supply.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
According to Wang Tao, technical analyst, palm oil could retest the resistance level of 5,023 Ringgit. A break above this mark would open up the path towards 5,076-5.112 Ringgit.
(source: Reuters)
