Palm oil prices rise for the second consecutive session due to crude strength

Malaysian palm futures increased?for the second consecutive session on Tuesday following a?continued rise in crude oil prices.

By midday, the benchmark palm oil contract on Bursa Derivatives exchange for November delivery was up 46 Ringgit or 0.95% at 4,896 Ringgit ($1,200.59).

Anilkumar bagani, the research head of Sunvin Group's vegetable oil broker in Mumbai, said that BMD CPO futures traded higher today due to gains in energy prices.

He said that he was able to provide additional support because of the expectation of tightness in Indonesia next year, due to its B50 mandate for biodiesel and the potential reduction in production due to El Nino.

Prices of oil rose on Tuesday as fears over supply disruptions persisted following attacks on Saudi Arabian infrastructure that knocked the East-West pipeline in the Kingdom offline. This cast doubt on the efforts to reduce shipping risks in Gulf.

Palm oil is a better option as a feedstock for biodiesel due to the stronger crude oil futures.

Dalian's soyoil contract, which is the most active contract in Dalian, dropped by 0.91% while palm oil contracts fell by 0.38%. Prices of soyoil on the Chicago Board of Trade rose by 0.07%.

As it competes to gain a share in the global vegetable oil market, palm oil is able to track rival edible oils.

Palm's trade currency, the?ringgit (dollar), has weakened by 0.1%, lowering the price of its commodities for foreign buyers.

Technical analyst Wang Tao stated that palm oil could bounce further into the range of 4,930 to 4,964 Ringgit per metric ton after breaking above a declining trendline.

(source: Reuters)