Palm prices rise on bargain-buying; stronger Ringgit and economic uncertainty limit gains

Malaysian palm futures gained on Tuesday, after six sessions of consecutive losses. Supported by bargain-buying, the gains were limited, however, by a stronger Ringgit and economic uncertainty.

The benchmark contract for palm oil delivery in July on the Bursa Derivatives Exchange gained 57 ringgit or 1.46% to $3,967 ringgit (US$904.06) per metric ton.

Anilkumar bagani, head of commodity research at Mumbai-based Sunvin Group, explained that the rise in crude palm oil futures was due to bargain buyers, as prices were currently discounted compared to soyoil.

He said that the recovery in energy and soyoil prices, along with an improved demand from India, has also helped to boost palm oil prices.

Bagani, however, said that the stronger ringgit as well as the global economic uncertainty continue to dampen gains.

Dalian's palm oil contract, which is the most active contract, rose by 0.67%. Chicago Board of Trade Soyoil Prices rose 1.03%.

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

Oil prices increased as investors used the losses of the day before to cover their short positions. However, concerns remain about economic headwinds due to tariffs and U.S. policy which could reduce fuel demand.

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

The palm ringgit's trade currency, the dollar, has weakened by 0.48%, making it slightly cheaper for foreign currency buyers.

In March, Indonesian crude palm oil and refined palm oils exports fell by nearly 2% on a month-to-month basis as the local consumption increased due to Ramadan. Shipments remained at four-year highs in March. ($1 = 4.3880 ringgit)

(source: Reuters)