Palm tracks Chicago soyoil higher but set for second weekly loss

Malaysian palm oil futures edged higher on Friday, tracking stronger Chicago soyoil, but were set for a second consecutive weekly loss.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange rose RM45, or 1.05 per cent, to RM4,341 (US$966.17) a metric ton at the midday break.

The contract has declined 0.89 per cent so far this week.

“Crude palm oil futures were seen trading higher on the back of a strong recovery in overnight Chicago soyoil and during Asian hours today,” said Anilkumar Bagani, head of research at Mumbai-based vegetable oil broker Sunvin Group.

However, Bagani added that the expectations of a drop in Indonesian palm oil reference price for February, uncertainty over the success of Indonesia’s B40 biodiesel mandate, and lacklusture Dalian palm olein futures capped the gains.

Dalian’s most-active soyoil contract rose 0.19 per cent, while its palm oil contract lost 0.33 per cent. Soyoil prices on the Chicago Board of Trade were up 2.64 per cent.

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

Malaysia’s palm oil stocks declined for a third consecutive month, falling 6.91 per cent to 1.71 million metric tons at the end of December, while crude palm oil production fell 8.3 per cent  and exports plunged 9.97 per cent, data from the Malaysian Palm Oil Board showed on Friday.

Cargo surveyors are scheduled to release Jan. 1-10 export data later in the day.

Crude oil prices rose in early Asian trade and were on track for a third straight week of gains, with icy conditions in parts of the United States and Europe driving up fuel demand for heating.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

The Malaysian ringgit, palm’s currency of trade, strengthened 0.16 per cent against the dollar, making the commodity more expensive for buyers holding foreign currencies.

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