Palm oil rebounds on Dalian Oils, stronger rival, and a weaker ringgit
Malaysian palm futures recovered on Monday following the recovery of rival Dalian oils as well as a weakening of the ringgit.
By midday, the benchmark contract of Bursa Derivatives' Exchange rose 0.23% ($1,082.77) to 4,827 Ringgit ($1,082.77) per metric ton. The contract dropped more than 4% in the last week.
Anilkumar bagani, head of commodity research at Mumbai's Sunvin group, said that although crude palm oil futures started lower, they quickly recovered due to bargain-buying following the steady performance seen in other oils, notably soy and rapeseed, he added.
The weaker Malaysian Ringgit and the strong recovery of rapeseed futures during Asian hours helped to further boost bullish sentiments for palm oil today, he added.
Kuala Lumpur based traders also stated that the weakening ringgit is supporting palm prices.
The palm ringgit's trade currency, the dollar, fell by 0.25%, making the commodity more affordable for buyers who hold foreign currencies.
Palm oil, the most active contract on Dalian Commodity Exchange, gained 0.97%. Chicago Board of Trade soyoil fell by 0.35%. Rapeseed futures contracts at the Zhengzhou Commodity Exchange increased by 1.75%.
As rival edible oils compete to gain a share of global vegetable oil market, palm oil monitors the price movement of their competitors.
Oil futures fell from their highest level in weeks, as traders took profits. However, the fall was limited due to fears of supply disruptions if more U.S. sanction were imposed on major suppliers Russia or Iran.
Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.
Intertek Testing Services, a cargo surveyor, said that exports of Malaysian products containing palm oil for the period Dec. 1-15 were down 9.8% compared to a month ago to 671.454 metric tonnes. AmSpec Agri Malaysia will release its estimates in the afternoon. Technical analyst Wang Tao predicted that palm oil could consolidate between 4,756 and 4,902 ringgits per ton in the next one to two days, before falling to 4,626 ringgits.
(source: Reuters)
