VEGOILS-Palm closes higher despite weak soyoil, sluggish export demand

The price of palm oil in Malaysia rose on Tuesday after a period of declines. However, weak soyoil and a weakened export demand limited gains.

At the close, the benchmark March palm oil contract on Bursa Derivatives Exchange rose 35 ringgit or 0.81% to 4,373 Ringgit ($975.03) per metric ton. The contract lost 0.69% the previous session.

David Ng, a proprietary trading at Kuala Lumpur's Iceberg X Sdn. Bhd., said that the price of crude palm oil fell due to lower soybean oil prices in Asian hours and a slow export pace.

According to Intertek Testing Services, a cargo surveyor and AmSpec Agri Malaysia, an independent inspection company, exports of palm oil products from Malaysia for December decreased between 2.5% and 8.8%.

Dalian's palm oil contract, which is the most active contract in Dalian, gained 1.94% and soyoil rose by 0.08%. Chicago Board of Trade soyoil prices were down by 0.07%.

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

The oil price fell on Tuesday, as the optimism about demand faded. However, tighter Russian and Iranian supplies due to expanding Western sanctions helped to limit losses.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's trade currency strengthened by 0.51% versus the dollar. This made the commodity more costly for buyers who hold foreign currencies.

A survey shows that Malaysian palm oil inventories will fall in December. This is the third consecutive month they have fallen. The reason for this is due to the recent heavy rains which affected harvest. ($1 = 4.4850 ringgit)

(source: Reuters)