Malaysian palm oil futures rose slightly in evening trade on Tuesday, snapping three sessions of declines as they tracked overnight strength in Chicago Board of Trade (CBOT) soyaoil. Palm was also supported by Monday's surge in crude oil prices, but the market was capped by a stronger Malaysian ringgit, traders said.
A stronger ringgit, palm's currency of trade, makes the edible oil more expensive for holders of foreign currencies. It climbed as much as 0.2 percent on Tuesday, and was last up 0.04 percent against the US dollar at 4.2285. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange was up 0.1 percent at 2,785 ringgit ($658.63) a tonne at the close.
Traded volumes stood at 44,571 lots of 25 tonnes each. "Overnight gains in rival oilseed soya and stronger crude oil may renew some buying interest," said a futures trader in Kuala Lumpur, referring to CBOT soyaoil and gains in crude oil prices. Oil rose as much as 3.5 percent on Monday, hitting its highest since mid-2015 on the back of a corruption crackdown in Saudi Arabia and as the US rig count fell.
Another trader added that while palm was up on soyaoil's overnight rise, a stronger ringgit was "checking palm's upside." Palm oil is affected by movements in related oils, as they compete for a share in the global vegetable oil market. December soyabean oil contract on the Chicago Board of Trade rose 0.9 percent on Monday, and was last up 0.2 percent on Tuesday.
Crude oil also affects palm prices as the vegetable oil is used as feedstock to make biodiesel as a fuel substitute. Palm oil looks neutral in a range of 2,779-2,808 ringgit per tonne, according to Wang Tao, a Reuters market analyst for commodities and energy technicals. In other related edible oils, the January soyabean oil contract on the Dalian Commodity Exchange was up 0.9 percent, while the January palm olein contract on the Dalian rose 0.6 percent.
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