Palmetto gains for the fourth time in a row on the strength of rivals; concerns about output cap gains
Malaysian palm futures continued to rise on Monday, extending gains for the fourth consecutive session. The increase was capped by concerns about output due to poor weather conditions experienced in the second largest producer in the world.
By the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was up 30 Ringgit or 0.76% at $3,977 Ringgit ($946.90).
The contract reached a high of 4,040 Ringgit per ton in an earlier session, but then pared back its gains after news broke that Indian refiners had cancelled 100,000 metric tonnes of palm oil orders for delivery between October-December.
Paramalingam Supramaniam is the director of Selangor's brokerage Pelindung Bestari. He said that palm oil prices are continuing to rise in line with other edible oils.
He said that the combination of the extreme heat in South America and the unfavourable conditions in the northern peninsular Malaysia keeps the market at risk.
Malaysia's Meteorological Department said on Friday that the monsoon will begin Tuesday and last until November.
The second largest palm producer in the world is likely to suffer from storms and flooding at the end of the monsoon.
Dalian's palm oil contract grew by 0.93% while the most active soyoil contract increased by 0.23%. Chicago Board of Trade soyoil prices were up by 1.02%.
As rival edible oils compete to gain a share in the global vegetable oil market, palm oil monitors the price movement of their competitors.
The oil prices increased slightly on Monday, after the U.S. cut its interest rates last week and as a result of Hurricane Francine. This was offset by a weaker demand for oil from China, which is the world's largest importer.
Brent crude futures were trading at $74.64 per barrel at 1002 GMT, up 0.2%. Palm oil is more attractive as a biodiesel feedstock due to the stronger crude oil futures.
The dollar was unchanged as the ringgit, which is palm's trade currency, remained unchanged. The ringgit's strength makes commodities more expensive to buyers who hold foreign currencies, and limits their gains. Reporting by Ashley Tang, Editing by Eileen Soreng and Mrigank Dahniwala; Vijay Kishore.
(source: Reuters)
