Palm prices fall in the run-up to Christmas

The price of palm oil in Malaysia traded sideways Tuesday, ahead of Christmas holidays as profit-taking capped gains.

At the close, the benchmark contract for palm oil delivery in March on the Bursa Derivatives exchange was up 13 Ringgit or 0.29% at 4,555 Ringgit ($1,015.83).

Anilkumar bagani, commodity researcher at Sunvin Group, stated that crude palm oil futures were trading sideways or lower due to profit-taking ahead of Christmas holidays.

The contract rose by 2.46% Monday, ending six consecutive sessions of losses. This was due to the stronger Dalian oil prices, and traders buying cheaper contracts following recent declines.

Bagani stated that the plan for Indonesia to increase its biodiesel mandate on Jan. 1, is now priced in. Analysts said on Wednesday that the plan is 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 1.47%. Chicago Board of Trade soyoil prices were up 0.12%.

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

The oil prices increased on Tuesday. They reversed the previous session's loss, and were boosted by a slight positive outlook for the market in the short-term despite the thin trading ahead of Christmas.

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

The dollar strengthened by 0.07% in relation to the ringgit. A stronger ringgit makes palm oil more expensive for foreign currency holders.

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

(source: Reuters)