Palm oil prices rise on the back of lower production prospects and stronger soyoil
The price of palm oil futures in Malaysia rose on Tuesday as the market grew optimistic about lower production and higher soyoil prices.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery had gained 23 ringgit (or 0.52%) to 4,460 Ringgit ($1,058.88). The contract dropped 0.20% over the last two sessions.
David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd. He said that crude palm oil futures were higher due to expectations of a weaker output in the coming week.
The market sentiment was also lifted by higher soybean oil prices in the Asian hours. Ng stated that prices are supported above 4,400 Ringgit and have resistance at 4,580 Ringgit.
According to a survey, Malaysian palm oil production and stocks are expected to fall in September for first time in 7 months.
On October 10, the Malaysian Palm Oil Board will release its September data on supply and demand.
The Chicago Board of Trade reported a 0.1% increase in soyoil. Dalian Commodity Exchange will be closed between October 1 and 8 for public holidays.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.
Oil prices extended gains as a smaller-than-expected November output hike by OPEC+ helped to ease some fears of a growing supply glut.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
According to two official gazette resolutions, the Argentinean government has raised the biofuel price for the domestic market.
The palm ringgit's trade currency strengthened by 0.02% against dollars, making it slightly more expensive for buyers who hold foreign currencies.
(source: Reuters)