Palm oil is set to rise and gain monthly gains

Malaysian palm oils futures rose slightly on Friday, reflecting the strength of rival oils. The market is also expected to post its first month gain in three-months.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for May delivery had gained 21 ringgit (0.47%) to reach 4,532 Ringgit ($1,015.69) per metric ton.

The contract is set to report its first weekly decline in six weeks, despite the fact that it has gained 5.67% over the past month. The contract traded on Friday between 4,487 and 4,542 Ringgit, as opposed to the 4,509 Ringgit that closed the previous session.

A Kuala Lumpur based trader stated that the crude palm oil futures are trading in a range of 4500-4550 while waiting for further news. The contract is supported by Dalian and Chicago external markets.

Dalian's palm oil contract, which is the most active contract in Dalian, dropped by 0.61%. Chicago Board of Trade Soyoil Prices grew by 0.15%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.

The Malaysian Ringgit, which is the currency of contract, fell to its lowest level on Friday since February 13. The contract is more attractive to foreign currency holders when the ringgit is weak.

Analysts said that a recovery in palm oil production as well as lower imports from rate-sensitive consumers will drive down prices, reducing the premium for tropical oil compared to rivals. This is happening even though top producer Indonesia increases biodiesel, they told a Kuala Lumpur conference earlier this week.

The price of palm oil could retest the support level at 4,476 Ringgit per metric tonne. A break below this mark would open up the possibility for a range between 4,411 and 4,453 Ringgit. ($1 = 4.4620 ringgit)

(source: Reuters)