Palm prices rise despite profit-taking and premium concerns

Malaysian palm futures rose for the second session in a row on Wednesday, despite profit taking pressure and fears that a wider premium over competing oils could dampen demand.

The benchmark contract for palm oil delivery in January on the Bursa Derivatives Exchange rose 58 ringgit or 1.25% to 4,695 Ringgit ($1,073.14) per metric ton.

The contract has increased by 3.67% in two sessions. Thursday is a holiday and the market will be closed.

Crude palm futures prices showed resilience in the previous session, but a slight retracement due to profit-taking activities is expected, said Darren Lim. A commodities strategist at Singapore-based brokerage Philip Nova.

"Optimism regarding an increase in Chinese demand after details of a possible fresh stimulus package supported speculative purchases above the 4,600-ringgit level.

"Traders will be closely monitoring developments related to vegetable oils as the widening of premium will reduce demand for palm oil compared to its alternatives, keeping gains limited," Lim added.

Dalian's palm oil contract grew by 1.29%, while the most active soyoil contract increased by 0.5%. Chicago Board of Trade soyoil prices were up by 0.82%.

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

The palm ringgit's trade currency, the dollar, fell by 0.09%, making the commodity more affordable for buyers who hold foreign currencies.

After falling in the previous sessions, oil prices remained near their one-month lows as markets weighed a possible ceasefire between Israel, Hezbollah, and rising OPEC+ supplies against a drop in U.S. gasoline stocks and concerns about demand.

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

The European Commission published data showing that the imports of soybeans by the European Union in 2024/25, which began in July, had reached 3,78 million metric tonnes by October 25, an increase of 1% compared to a year ago, but a decrease by 21% in palm oil imports, at 988,458 metric tons. $1 = 4.3750 Ringgit (Reporting and Editing by Ashley Tang, Mrigank Dahniwala and Subhranshu Sahu; Editing Emelia Sithole Matarise).

(source: Reuters)