Palm Up on Overnight Soyoil Strength, Stronger Exports
Category: Oilseeds
(Reuters) – Malaysian palm oil futures were set for the first gain in five sessions in early trade on Wednesday, supported by rising export demand and strength in soyoil overnight on the Chicago Board of Trade (CBOT).
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose 0.5 percent to 2,780 ringgit ($663.25) a tonne at the midday break.
The rise followed four straight days of declines as palm tracked weakness in related edible oils and was also pulled lower by bearish price outlooks at an industry conference last week.
Traded volumes stood at 27,555 lots of 25 tonnes each at noon.
“The market is higher on better soyoil, closing (higher) last night,” said a futures trader from Kuala Lumpur, referring to CBOT soyoil.
He added that strong export data from cargo surveyor Intertek Testing Services (ITS) was also supporting the market, but the gains would likely be short-lived as expectations of stronger exports were already priced in.
“The market needs to break above 2,800 ringgit to continue its bullish rally. Otherwise it will come lower to 2,740-50 ringgit,” said the trader.
Palm oil shipments from Malaysia, the world’s second-largest producer after Indonesia, rose 25.4 percent during Sept. 1-20 versus the corresponding period the previous month, according to ITS data on Wednesday morning.
Demand for the tropical oil is seen rising for the full
month of September, as key buyers China and India stock up ahead of the Mid-Autumn festival and Diwali respectively, which lead to higher usage of palm oil.
Palm oil prices are also affected by movements in related edible oils including soy, as they compete for a share of the global vegetable oils market.
The October soybean oil contract on the Chicago Board of Trade posted its first gain in a week on Tuesday, but was last down 0.1 percent on Wednesday.
In other related oils, the January soybean oil contract on the Dalian Commodity Exchange dipped 0.1 percent, while the January palm olein contract fell 0.4 percent.
