Palm prices fall as India avoids premium prices but still has the best week for 16 months.

Malaysian palm futures ended lower on Friday, but still recorded its highest weekly gain since more than 16-months, as India pulled away from buying amid an increasing premium over soft oils. Fund positions are largely driving the current prices.

At the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for January delivery fell 70 ringgit or 1.52% to 4,533 Ringgit per metric ton.

The contract ended a winning streak of four sessions on that day, but posted a gain for the week of 6.53%. This is the highest weekly gain since mid-June 20,23.

A Mumbai-based trader at a global trading house stated that palm oil is currently selling at a premium to other soft oils. This has resulted in a reduction of Indian interest since the festive season's purchases are over.

The future price of crude palm oil is dominated by fund positions. The trader predicted that the market will experience some corrections once the short positions are reduced.

Exports of Malaysian Palm Oil Products rose between 9.7% to 10.8% from Oct. 1-25 compared with a similar period last month.

Dalian's palm oil contract, which is the most active contract in Dalian, rose by 1.09% while soyoil contracts increased by 1.07%. Chicago Board of Trade soyoil prices were down by 0.9%.

As they compete to gain a share of the global vegetable oil market, palm oil monitors the price fluctuations of competing edible oils.

Oil prices are expected to rise by more than 1% this week, due to tensions in Middle East, the top oil producing region in the world, and the upcoming restart of Gaza ceasefire negotiations.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit's currency has strengthened by 0.18% against U.S. dollars, increasing the price of the commodity for buyers who hold foreign currencies.

(source: Reuters)