Palm futures steady as rising output, strong ringgit offsets boost from rival oils

Malaysian palm oil futures traded in tight range on Thursday as market participants await cues amid support from rival vegetable oils, although a strong ringgit and rising production limited gains.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost 14 ringgit, or 0.35%, to 4,023 ringgit ($917.45) a metric ton by the midday.

The contract traded between 4,005 ringgit and 4,054 ringgit a ton in early trade, after closing at 4,037 ringgit in the previous session.

“Today crude palm oil futures is still consolidating after yesterday’s supportive demand news from India and rising production from Malaysian Palm Oil Association,” a Kuala Lumpur-based trader said, adding the market is awaiting further cues.

However, rising production and a stronger Malaysian ringgit, the contract currency of trade, may cap the price rally, the trader said.

The ringgit strengthened 0.07% against the US dollar, making the contract less attractive for foreign currency holders.

Dalian’s most-active soyoil contract was up 0.56%, while its palm oil contract gained 0.86%.

Soyoil prices on the Chicago Board of Trade (CBOT) rose 0.54%.

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

India has started raising palm oil purchases after a lull of five months as a correction in prices made the tropical oil cheaper than rival soyoil, encouraging refiners to place orders to replenish inventories.

Palm oil may retrace into a range of 3,929 ringgit to 3,968 ringgit per metric ton, following its failure to break resistance at 4,072 ringgit.

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