Malaysian palm oil rises, supported by gains in competing oils

Malaysian palm oil futures gained on Tuesday, underpinned by strength in rival oils on the Dalian and Chicago markets, while market participants await further leads from an industry conference in Kuala Lumpur.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange gained RM52, or 1.14 per cent, to RM4,611 (US$1,045.58) a metric ton by the midday break.

“Today’s crude palm oil futures is range-trading between 4600 and 4650 on the back of firmer Dalian market while waiting for fresh lead from the Palm Oil Conference,” a Kuala Lumpur-based trader said.

Dalian’s most-active soyoil contract was up 0.48 per cent, while its palm oil contract gained 0.35 per cent. Soyoil prices on the Chicago Board of Trade rose 1.14 per cent.

Palm oil tracks price movements of rival edible oils, as it competes for a share of the global vegetable oils market.

Malaysia seeks to increase palm oil output with the help of high-yield varieties without expanding planting areas, Plantation and Commodities Minister Johari Abdul Ghani said, as overseas demand for its palm oil is seen rising after top producer Indonesia increased the percentage component of the oil for biodiesel.

Malaysia’s palm oil stocks are set to fall to 1.5 million metric tons by the end of February, their lowest levels in nearly two years, as floods have hit production and the Ramadan festival boosted demand, a senior regulatory official told Reuters.

Palm oil’s share of India’s annual edible oil imports is set to drop below soft oils for the first time as its rising premium over soyoil and sunflower oil pushes refiners toward more affordable alternatives, the head of an industry body said.

Palm oil may fall more towards the February 17 low of RM4,457 per metric ton, as a flat pattern or double-top might be forming.

Tags: Malaysia, palm oil, futures, benchmark contract, soyoil