SINGAPORE: Malaysian palm oil futures rose on Friday to log a third straight weekly gain amid higher Dalian softs and crude oil prices, although a stronger ringgit capped further gains.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange rose 18 ringgit, or 0.44%, to 4,089 ringgit ($873.34) a metric ton at closing, the highest close since July 25.
The contract logged a weekly gain of 3.1%, fuelled by tight supply and optimism over palm demand.
Citing lower productions in key palm-producing countries, palm oil is likely to “continue to ration demand, pricing itself at a premium to available soft oil alternatives”, said Pranav Bajoria, director of Singapore-based brokerage Comglobal Pte Ltd.
Higher Malaysian palm oil prices are attributed to upticks in vegetable oil futures listed on China’s bourses, while gains were seen capped by a stronger ringgit, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Palm oil falls after hitting seven-month high
Dalian’s most-active soyoil contract rose 1.92%, while its palm oil contract gained 1.69%. Soyoil prices on the Chicago Board of Trade dipped 0.39% after a 2.27% climb on Thursday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices rose on Friday, driven by growing demand in the world’s biggest consumers, the United States and China, while the U.S. Federal Reserve gave a positive signal on the possibility of rate cuts.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.45% against the dollar, after the Bank Negara Malaysia stood steady on interest rates for a fifth straight meeting on Thursday, where it reiterated that the currency was undervalued and did not reflect Malaysia’s positive economic fundamentals and prospects.
The ringgit rose as much as 0.6% earlier in the session to its highest level since Jan. 16.
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