KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday, mirroring gains in rival soyoil prices and supported by anticipation of production declines in Malaysia.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rose 36 ringgit or 0.77%, to 4,735 ringgit ($1,061.18) a metric ton by the midday break.
The palm market is reacting to stronger soyoil prices, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
“Palm oil has also been seeing a lot of selling pressure of late and given the anticipation of weaker output in Malaysia as well as positive sentiment in the soyoil market, the market is looking for catalyst that can drive it higher,” he said.
The Malaysian Palm Oil Board is expected to release its monthly supply-demand data for November on Dec. 10.
Dalian’s most-active soyoil contract rose 0.7%, while its palm oil contract gained 2.08%. Soyoil prices on the Chicago Board of Trade added 3.02%. Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Palm closes higher on stronger rival oils, possible export tax hike in Indonesia
The ringgit, palm’s currency of trade, weakened 0.31% against the US dollar, making the commodity cheaper for buyers holding foreign currencies.
Oil prices ticked up in early trade on Tuesday after falling in the previous session as investors took stock of a potential ceasefire between Israel and Hezbollah, weighing on oil’s risk premium.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Rapeseed and mustard planting in India will likely drop as above-average temperatures during the sowing season prompted farmers to switch to crops less affected by heat but offer equally good returns, industry officials told Reuters.
Lower production of India’s main winter-sown oilseed crop could force the country to increase expensive imports of cooking oils such as palm oil, soyoil and sunflower oil to meet demand.
Palm oil may break support at 4,647 ringgit per metric ton, and fall into 4,510 ringgit to 4,553 ringgit range, Reuters technical analyst Wang Tao said.