Palm rebounds against Dalian soyoil and bargain-buying

After six consecutive sessions of losses, the price of palm oil in Malaysia rose on Monday. This was boosted by higher Dalian soyoil and traders buying cheaper contracts following recent declines.

At the close, the benchmark contract for palm oil delivery in March on the Bursa Derivatives exchange was up 112 Ringgit or 2.53% at 4,545 Ringgit ($1,012.93) per metric ton.

Anilkumar bagani, commodity researcher at Sunvin Group, stated that crude palm oil prices were higher because investors snapped up cheaper contracts following recent price declines.

Dalian's palm oil contract, which is the most active contract, gained 0.57%. Chicago Board of Trade soyoil prices rose 1.23%. Rapeseed futures at the Zhengzhou Commodity Exchange increased by 1.12%.

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

Indonesia announced that it would raise its export levy on crude palm oil from 7.5% to 10% to fund higher biodiesel subsides.

Bagani added that "the news that Indonesia raised its export levies as well as launching the B40 mandate on Jan. 1, has provided some support for the bullish cause."

The oil market rose Monday, as the lower-than expected U.S. Inflation data revived hope for policy easing. However, the prospect of a surplus in supply next year was weighing on the market.

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

The palm ringgit's trade currency strengthened by 0.42% in relation to the dollar. This made the commodity more costly for buyers who hold foreign currencies. ($1 = 4.4870 ringgit)

(source: Reuters)