Palm oil prices rise on weaker Indonesian supply prospects
The price of Malaysian palm oils futures rose on Wednesday due to the prospect of lower supplies in Indonesia, the world's biggest producer, but lacklustre exports restricted gains.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for November delivery rose 17 ringgit or 0.46% to 3,732 Ringgit ($853.22) per metric ton.
The palm oil price is uncompetitive against soft oils due to Indonesian production not meeting expectations. This is surprising as palm origins are usually at their peak during this time of year.
Bajoria stated that this could change if Indonesian sales increase and palm oil is replaced by alternatives.
Dalian's palm oil contract rose 0.76%, while the most active soyoil contract increased 0.33%. Chicago Board of Trade soyoil prices increased by 0.28%.
As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.
Intertek Testing Services, a cargo surveyor, said that exports of Malaysian products containing palm oil for the period August 1-20 are down 18.4% compared to the previous month.
AmSpec Agri Malaysia, an independent inspection company, reported on Tuesday that exports had fallen 16.7% in the same time period.
Malaysia maintained its crude palm oil export tax at 8% and increased its reference price in September.
The second largest palm exporter in the world calculated a September reference price of 3,915,19 ringgit (US$896.75) per ton.
The Malaysian Ringgit, the currency of palm's trade, dropped 0.1% against dollar after reaching its highest level since February 2023.
Palm oil is more appealing to foreign currency holders due to the weaker Ringgit.
Technical analyst Wang Tao said that palm oil could retest the resistance zone between 3,745-37644 ringgit. A break above this level would confirm both an upside target of 3,809 and a head-and-shoulders inverted pattern.
(source: Reuters)
