VEGOILS - Palm extends its winning streak on concerns about output; firm ringgit is a factor
The price of Malaysian palm oils futures increased for the fifth consecutive session on Tuesday, despite concerns about production. A stronger ringgit and cancellations by India, the world's largest buyer in terms of palm oil imports, capped the gains.
The benchmark palm-oil contract for December delivery at the Bursa Derivatives Market closed 12 ringgit or 0.3% higher, closing at $3,989 ($961.20) per metric ton.
The contract's price has increased 6.7% over the last five sessions.
Refiners in India cancelled orders for 100,000 metric tons palm oil due to be delivered between October and December. The government increased import duties because of a rise in prices overseas, which prompted them book profits.
A Mumbai-based trader at a global trading house said that "Indian buyers have backed out of deals. This shows that people will switch cooking oils if the prices continue to rise."
The palm ringgit's trade currency strengthened by 1.19% to a three-year high against the U.S. Dollar, increasing the price of the commodity for buyers with foreign currencies.
Mitesh Saida, a Mumbai-based dealer, believes that the upcoming festive season, combined with lower inventories in major importing countries will prevent a price drop.
Dalian's palm oil contract grew by 0.58%, while the most active soyoil contract increased by 1.06%. Chicago Board of Trade soyoil prices rose 1.08%.
As they compete to gain a share in the global vegetable oil market, palm oil monitors prices of competing edible oils.
The price of oil rose on Tuesday, boosted by news that China, the top importer, was introducing a stimulus program and fears about the Middle East conflict, which could affect regional supplies. Meanwhile, another hurricane threatens the United States' supply as the world's largest crude producer.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The state news agency Bernama said that Malaysia's plantations ministry reported last week that a proposal for a revision of the windfall profits levy in the palm oil sector was sent to Malaysia's finance ministry. ($1 = 4.1500 ringgit)
(source: Reuters)
