Palm oil sees its first monthly increase in three months
The price of Malaysian palm oils futures increased for the second consecutive session on Friday. This was their first gain in a month since three months. Firmer oil contracts from rivals supported the market as traders waited to hear the latest news on import and export taxation from India and Indonesia, the top producer.
The benchmark palm-oil contract for delivery in November on the Bursa Derivatives Exchange of Malaysia closed 38 ringgit or 0.96% higher at $3978 ringgit ($920.83).
The contract rose 2.87% from week to week and 1.79% in the month. This was its first rise for a full calendar month since June.
Lingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that the palm market tracks the rise in Chicago oil and Dalian oil higher. There is also a sudden buy in the cash markets. Overall sentiment is strong, as buyers are buying on dips.
Dalian's palm oil contract, which is the most active contract, grew by 1.03%. Chicago Board of Trade soyoil prices increased by 0.57%.
As they compete to gain a share of the global vegetable oil market, palm oil monitors price movements for related oils.
Lingam said that the market also expects Indonesia to raise its reference price by September.
Indonesia will set its palm-oil reference price, export tax and levy by the end the month.
India, a major importer of palm oil, is considering increasing import taxes on vegetable oil. This could reduce demand and decrease overseas purchases.
The Malaysian Ringgit, the palm oil industry's currency, fell 0.19% in value against the US dollar. Palm oil becomes more appealing to foreign currency holders when the ringgit is weaker.
Oil prices rose on Friday, and are on track to gain a week's worth of gains. Libyan production disruptions and Iraqi plans for reducing production have raised concerns about supply. Meanwhile, data showing that the U.S. economic growth was faster than initially estimated has eased fears about a recession.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger. ($1 = 4.3200 ringgit)
(source: Reuters)
