Palm tracks Chicago soyoil but is set to lose money for the second consecutive week

Malaysian palm futures were slightly higher on Friday as they tracked stronger Chicago soyoil. However, they are set to suffer a second weekly loss.

At midday, the benchmark contract for palm oil delivery in March on the Bursa Derivatives exchange rose 45 ringgit or 1.05% to 4,341 Ringgit ($966.17) per metric ton.

This week, the contract has fallen by 0.89%.

Anilkumar bagani, the head of research for Mumbai-based Sunvin Group's vegetable oil broker, said that crude palm oil futures traded higher today on the back a strong recovery overnight in Chicago soyoil.

Bagani said that the lacklustre Dalian palm olein contracts and the uncertainty surrounding the B40 biodiesel mandate in Indonesia, as well as the expectation of a decline in the Indonesian palm oil price reference for February, capped the gains.

Dalian's soyoil contract that was most active rose by 0.19% while palm oil contract fell 0.33%. Chicago Board of Trade soyoil prices were up by 2.64%.

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

Malaysian palm oil stocks fell for the third consecutive month. They dropped 6.91% at the end December to 1,71 million metric tonnes, while production of crude palm oil decreased 8.3%, and exports plummeted 9.97%.

Later in the day, cargo surveyors will release export data for Jan. 1-10.

Crude oil prices were up in the early Asian trading and on course for a third consecutive week of gains. Icy conditions in some parts of North America and Europe are driving fuel demand to heat homes.

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

The palm industry's trade currency, the Malaysian ringgit (RMB), strengthened by 0.16% in relation to the dollar. This made the commodity more costly for buyers who hold foreign currencies.

Technical analyst Wang Tao stated that palm oil prices are expected to stabilise around the support level of 4,263 Ringgit per metric tonne and then bounce up to a range between 4,362 to 4,423 Ringgit. ($1 = 4.4930 ringgit)

(source: Reuters)