El Nino concerns and palm oil extends its gains over stronger rival oils
The market for Malaysian palm oils futures rose again on Tuesday as fears of production disruptions due to El Nino and firmer edible oils supported the market.
By midday, the benchmark palm oil contract for September delivery at 'the Bursa Derivatives Exchange in Malaysia' had gained?21 Ringgit (0.46%) to 4,571 Ringgit ($1,122.54) per metric ton.
Market sentiment was lifted by higher soybean oil and Dalian Palm Olein prices, according to David Ng, a proprietary trading at Kuala Lumpur based trading firm Iceberg X Sdn Bhd.
Ng said that the El Nino weather risk in the coming months, which could disrupt production patterns in this country, also supported the market.
Dalian's palm oil contract gained 1.27%, while its most active soyoil contract grew by 1.24%. Prices of soyoil on the Chicago Board of Trade rose 0.05%.
Palm oil monitors?the movements in price of rival edible oils as it competes to gain a share on the global vegetable oils markets.
The oil prices rose, but gains were limited as traders focused on the supply increases and demand prospects rather than easing geopolitical tensions.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm ringgit's trade currency strengthened by 0.22% versus the dollar. This made the commodity slightly cheaper for buyers who hold foreign currencies.
PT Agrinas Palma Nusantara, a state-owned planter in Indonesia, plans to add soybeans and cassava to its portfolio and open biodiesel plants and bioethanol factories to support the government’s renewable energy agenda.
Technical analyst Wang Tao stated that palm oil could extend its gains to 4,633 Ringgit per metric tonne, after a three-wave cycles from 4,710 Ringgit have?completed.
1 Please enter the freight rate from Peninsula Malaysia/Sumatra, and then press Enter, or click twice between the brackets. Terminal users can view cash and future edible oil prices simply by clicking on the codes between the brackets. To go back, hit F11. 1
(source: Reuters)
