Palm prices fall on profit-taking ahead of the Christmas holidays

The price of palm oil futures in Malaysia fell on Tuesday, as traders booked profits before the Christmas holiday.

At midday, the benchmark March palm oil contract on Bursa Derivatives Exchange dropped 28 ringgit or 0.62% to 4,514 Ringgit per metric ton.

Anilkumar bagani, commodity researcher at Sunvin Group, says that crude palm oil futures have traded in a sideways to lower range due to profit-taking ahead of Christmas holidays.

He said that the price rise on Monday, which was largely driven by Indonesian B40 biodiesel, had been priced in. Market participants are now cautious as they close their year-end books.

The contract rose 2.46% Monday, ending six consecutive sessions of losses.

Analysts said that the plan for Indonesia to increase its biodiesel mandate on Jan. 1, looks more likely to be implemented slowly, with industry participants seeking a phased-in period.

Dalian's palm oil contract, which is the most active contract, gained 1.24%. Chicago Board of Trade soyoil prices were down by 1.06%.

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

Prices were higher on Tuesday, despite a thin market ahead of Christmas Day. The U.S. economy and India's rising demand for oil, the third largest oil importer in the world, supported the price increase.

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

The dollar's value of the ringgit, which is palm's trade currency, has remained unchanged.

Bursa Malaysia's Derivatives Market will be closed for Christmas on Wednesday.

Technical analyst Wang Tao stated that palm oil could rise further to a range between 4,624 and 4,684 ringgit for a metric ton as it has climbed up a falling channel.

(source: Reuters)