VEGOILS - Palm extends its gains over rival oils; bad weather in Malaysia prompts concerns about output.
Malaysian palm futures were up for the fourth session in a row on Monday, boosted by gains in edible oils. However, the market was still vulnerable due to concerns about production in light of the poor weather conditions experienced in the second largest producer in the world.
By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for December delivery had gained 87 Ringgit or 2.2% to 4,034 Ringgit ($958.88).
After two weeks of falling prices, the contract rose 3.5% in last week's trading.
Paramalingam Supramaniam is the director of Selangor-based 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 1.59%, while the most active soyoil contract increased by 0.58%. Chicago Board of Trade soyoil prices rose 1.23%.
As rival edible oils compete to gain a share in the global vegetable oil market, palm oil monitors the price movement of their competitors.
Early Monday morning, oil prices rose slightly on concerns about the Middle East conflict and the impact it may have on supply. Also, the expectation that the U.S. rate cut announced last week would support demand.
Brent crude futures were up by 0.82% to $75.10 per barrel at 0444 GMT. Palm oil is more appealing as a biodiesel feedstock due to the stronger crude oil futures.
The palm ringgit's trade currency, the dollar, has fallen by 0.17%, making it cheaper for buyers who hold foreign currencies.
Technical analyst Wang Tao believes that the price of palm oil could return to its August 30 high of 4,003 Ringgit per metric tonne, due to a powerful wave C.
(source: Reuters)
