VEGOILS - Buy more bargains, but the ringgit is stronger; economic uncertainty limits gains

The price of palm oil in Malaysia rose on Tuesday. This was due to bargain-buying, but the stronger ringgit, as well as economic uncertainty, limited gains.

At midday, the benchmark palm oil contract on Bursa Derivatives Exchange for July delivery rose 8 ringgit (0.2%), to $3,918 ringgit (US$895.5) per metric ton.

Anilkumar bagani, head of commodity research at Mumbai-based Sunvin Group, explained that the rise in crude palm oil futures was due to bargain buyers, as prices were currently discounted compared to soyoil.

He said that the recovery in energy and soyoil prices, along with an improved demand from India, has also helped to boost palm oil prices.

Bagani, however, said that the stronger ringgit as well as the global economic uncertainty continue to dampen gains.

Dalian's soyoil contract that is most active rose by 0.65% while palm oil contract fell by 0.12%. The Chicago Board of Trade's (CBOT's) soyoil price rose 0.43%.

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

Investors took advantage of Monday’s losses to cover their short positions. However, concerns remain about the economic headwinds that tariffs could cause.

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

The palm ringgit's trade currency, the dollar, has weakened by 0.18%, making it slightly cheaper for foreign currency buyers.

In March, Indonesian crude palm oil and refined palm oils exports fell by nearly 2% on a month-to-month basis as the local consumption increased due to Ramadan. Shipments remained at four-year highs in March.

A projection analysis suggests that the price of palm oil could fall to a range between 3,782 and 3,818 ringgits per metric tonne, according to technical analyst Wang Tao.

(source: Reuters)