Palm oil prices rise on expectations of reduced production in Malaysia
The price of Malaysian palm oils futures rose on Monday, as lower production expectations and lower export estimates offset the weakness in Chicago soyoil contracts.
By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was up 0.38% to 4,232 Ringgit ($968.42).
Anilkumar bagani, the commodity research director at Mumbai-based Sunvin Group, says that futures prices were affected by the sharply lower Chicago soyoil after U.S. President Donald Trump threatened to sanction Columbia.
He said that the export performance of Malaysia was also consistently poor, as shown during the period from Jan. 1 to 25.
Bagani said that Malaysian palm oil production may have declined by as much as 14% between Jan. 1-20, citing estimates provided by the Malaysian Palm Oil Association.
Dalian's palm oil contract, which is the most active contract, rose 1.4% while soyoil prices in Dalian increased by 0.76%. Chicago Board of Trade soyoil prices were down by 0.73%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.
The Indonesian palm oil industry association GAPKI reported that the November stock of palm oil in Indonesia increased by 3.2% compared to the previous month, as a slowdown in exports compensated for a drop in production.
Exports of palm oil products from Malaysia fell between 18.9% to 24.1% in the period Jan. 1-25 compared with a similar period last month.
After Trump announced a wide range of measures to increase U.S. production of oil and natural gas in his first week as president, the price of oil fell by more than 1%.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The palm ringgit's trade currency strengthened by 0.07% against dollars, making it slightly more expensive to buyers who hold foreign currencies.
Technical analyst Wang Tao stated that palm oil could test resistance at 4 265 ringgits per ton. A break above this level would open the door to 4 315 ringgits to 4,364 ringsgit.
(source: Reuters)
