KUALA LUMPUR: Malaysian palm oil futures jumped on Wednesday, recouping losses from the previous session as it track a surge in rival soyoil prices overnight, but forecasts of growing supply limited gains.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 48 ringgit, or 1.45%, to 3,364 ringgit ($730.99) a tonne during early trade. The contact had fallen nearly 2% on Tuesday.
Malaysia’s palm oil inventories at the end of May are expected to rise 6.8% from the month before to 1.6 million tonnes as production swells to its highest so far this year, a Reuters survey showed on Tuesday.
Indonesia is expecting a severe dry season from the impact of the El Nino weather pattern, threatening harvests and raising the risks of forest fires, the head of its weather agency said on Tuesday. India’s palm oil imports sank to a 27-month low in May as buyers cancelled expensive cargoes of the edible oil and replaced them with cheaper soyoil and sunflower oil, dealers told Reuters on Tuesday.
Dalian’s most-active soyoil contract rose 0.5%, while its palm oil contract gained 0.3%. Soyoil prices on the Chicago Board of Trade firmed after a 3.4% overnight jump. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may retest a resistance at 3,436 ringgit per tonne, a break above which could lead to a gain into 3,493-3,586 ringgit range, Reuters technical analyst Wang Tao said.
World shares edged higher on Tuesday as investors mulled whether a recent rally in stocks has legs to run further, while Treasury yields drifted higher as traders pared bets that US rate cuts are on the horizon given sticky price pressures.
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