VEGOILS-Palm Sees First Gain in Four Sessions on Stronger Overnight Soyoil
Category: Oilseeds
l(Reuters) – Malaysian palm oil futures rose in early trade on Tuesday, on track to snap three earlier losing sessions, as palm gained on overnight strength in Chicago Board of Trade’s (CBOT) soyoil.
Palm was also supported by Monday’s surge in crude oil prices, but gains could be capped by a stronger Malaysian ringgit, said traders.
A stronger ringgit, palm’s currency of trade, makes the edible oil more expensive for holders of foreign currencies. The ringgit was last up 0.1 percent against the U.S. dollar at 4.2250.
The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange was up 0.3 percent at 2,791 ringgit ($660.59) a tonne at the midday break.
Traded volumes stood at 14,250 lots of 25 tonnes each at noon.
“Overnight gains in rival oilseed soy and stronger crude oil may renew some buying interest,” said a futures trader from Kuala Lumpur, referring to CBOT soyoil and gains in crude oil prices.
Oil prices rose as much as 3.5 percent on Monday, hitting their highest since mid-2015, on the back of a corruption crackdown in Saudi Arabia and as the U.S. rig count fell.
Another trader added that while palm was up on soyoil’s overnight strength, a stronger ringgit was seen “checking palm’s upside.”
Palm oil is affected by movements in related oils, as they compete for a share in the global vegetable oils market. The December soybean oil contract on the Chicago Board of
Trade rose 0.9 percent on Monday, but was trading flat around 0455 GMT 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 soybean oil contract on the Dalian Commodity Exchange was up 0.7 percent, while the January palm olein contract on Dalian rose 0.5 percent.
