Palm extends its gains as it faces Indonesian output risks and a softer ringgit

Malaysian palm futures rose for the third consecutive session on Monday, thanks to a weaker ringgit as well as bullish predictions from industry analysts.

At midday, the benchmark palm oil contract on Bursa Derivatives Exchange for January delivery gained 13 ringgit or 0.31% to 4,158 Ringgit ($1,002.89) per metric ton.

A Kuala Lumpur based trader stated that the contract has seen support after bullish presentations made at the Indonesia Palm Oil Conference held last week.

Analysts have flagged palm oil as a problem.

Prices are a little higher than usual.

In the next few months, there may be an increase in prices due to uncertainties arising from land seizure policy and a plan for biodiesel by Indonesia's top producer.

The ringgit (palm's trade currency) fell by 0.41% to the dollar. This made the commodity more affordable for buyers who held foreign currencies.

Dalian's palm oil contract, which is the most active contract in Dalian, gained 0.25%. Chicago Board of Trade soyoil prices were up by 0.22%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.

Intertek Testing Services, a cargo surveyor, estimated that the exports of palm oil products from Malaysia for November 1-15 were down 15.5% compared to a month ago. AmSpec Agri Malaysia is expected to release its export estimates later today.

The oil prices dropped in the early Asian trading, wiping out last week's gains. Loadings were resumed at Novorossiysk, the Black Sea port which had been affected by an attack from Ukraine.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

Technical analyst Wang Tao stated that palm oil could retest the resistance level of 4,145 ringgits per ton. A break above this would lead to gains in the range 4,171-42,213 ringgits.

(source: Reuters)