The VEGOILS Palm index is up on the back of bargain-hunting and a stronger ringgit, but gains are capped by the stronger ringgit.

After trading sideways for most of the session, Malaysian palm oils futures made a recovery on Monday. However, a stronger Ringgit limited gains.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was up 6 Ringgit or 0.16% at $3687 Ringgit ($843.71) per metric ton.

Last week, the contract fell 1.79%, marking its fourth consecutive weekly decline.

"Palm Oil Futures is supported after found support above 3,563 ringgit per ton, but firm ringgit could limit upside," said a Kuala Lumpur based trader.

In the early session, the contract was traded within a range of 3,663-3.705 ringgit/ton.

The Malaysian Ringgit, which is the currency used in the trade contract, rose 1.31% to its highest level since mid-February 20,23. The contract became less attractive to foreign currency holders due to a stronger ringgit.

Dalian's soyoil contract with the highest volume of trading lost 0.46% while palm oil contracts gained 0.27%. Chicago Board of Trade Soyoil Prices were down by 0.18%.

As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.

Indonesia has revised the rules for its palm oil domestic marketing obligation (DMO). The price cap was raised to increase supplies of inexpensive cooking oil while lowering the domestic distribution target from 500,000 tons to 250,000 tonnes per month.

The wave (5) may drive palm oil back to its low of 3,638 Ringgit per metric tonne, which was reached on August 14.

(source: Reuters)