Palm oil prices rise on speculation and short-covering
Malaysian palm futures were up on Monday due to a combination speculative purchases and short covering. However, gains were limited by the lower crude oil price.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery rose 22 ringgit or 0.51% to 4,372 Ringgit ($1,018.88).
The contract gained 2.76 % in the previous session.
Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari.
"We are seeing lower estimates for Malaysian Production, but Indonesian Production is rocketing forward with a double-digit growth. He said that this could limit gains when the speculative purchases stop.
Dalian's palm oil contract rose 2.06% while the most active soyoil contract increased 0.36%.
The Chicago Board of Trade soyoil price was down by 0.55% following the drop in CBOT soybeans on the expectation of a record U.S. harvest.
As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors the price movement of their competitors.
The palm ringgit (the currency of trade) fell 0.16% in value against the US dollar.
Oil prices dropped on Monday, after data revealed that China's inflation rate had declined. A lack of clarity about the country's plans for economic stimulus stoked concerns over fuel demand in the largest crude importer.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
The Solvent Extractors' Association of India reported on Friday that India's imports of palm oil in September dropped by almost a third compared to a month earlier due to higher prices. They hit a six-month-low, while imports of sunflower oil plummeted to a 10-month-low.
Technical analyst Wang Tao stated that palm oil could test a zone of resistance between 4,406 and 4,432 ringgits per ton. A break above this zone would open the door to 4,483 ringgit.
(source: Reuters)
