Palm extends its gains on expectations of strong demand

Malaysian palm futures rose on Wednesday due to a?anticipated higher demand for the Lunar New Year holiday. By midday, the benchmark 'palm oil contract on the 'Bursa Malaysia Derivatives Exchange for April delivery had gained 38 ringgit (0.93%) to 4,132 Ringgit ($1,019.24).

Crude palm oil futures rose amid expectations that demand will be strong in the weeks to come, ahead of the Lunar New Year festival season next month. David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd.

Exports of Malaysian products made from palm oil, as estimated by cargo surveyors for January 1-20, have increased between

month-on-month. Dalian's palm oil contract increased?1.24%, while the most active soyoil contract in Dalian firmed up 0.05%. Chicago Board of Trade soyoil prices were up 0.13%.

Palm oil follows?the movements in price of rival edible oils, as it competes to gain a share on the global vegetable oil market. Oil prices dropped as an anticipated build-up in U.S. crude stocks outweighed temporary production halts at two large Kazakh fields and the?geopolitical threat of tariffs by the U.S. over its bid to take control of Greenland.

Weaker crude futures make palm a less appealing option as a biodiesel source. The ringgit (palm's currency for?trade) has weakened by 0.05% in relation to the dollar. This makes the commodity slightly more affordable for buyers who hold foreign currencies. The Malaysian Palm Oil Council stated that palm oil prices are expected to be rangebound in February between 4,000 and 4,300 Ringgit ($987 to $1061) per metric ton. This is due to seasonal declines of production and stock, which will support the price. Technical analyst Wang Tao believes that the price of palm oil could return to its highs from January 13, which was 4,147 ringgit for a metric ton. This is due in part to a wave C.

(source: Reuters)