Palm oil prices rise on the back of strong export data and higher rival oils

Malaysian palm oils futures continued to lose money on Thursday, despite a strong export performance over the period August 1-20. This was due to the weakness of Dalian Commodity Exchange's vegetable oils.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for delivery in November had fallen 18 ringgit (0.4%) to 4,480 Ringgit ($1,061.61) per metric ton.

Dalian was weaker in the morning session. "Our palm November benchmark failed (to) sustain the 4,500-ringgit psychological marker and invited further selling at noon," said a Kuala Lumpur based trader.

Dalian's palm-oil contract fell 0.11% while its most active soyoil contract dropped 0.45%. Soyoil traded on the Chicago Board of Trade rose by 0.2%.

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

GAPKI data showed that Indonesian palm oil inventories fell by 13% monthly to 2,53 million metric tonnes by the end June, despite a rise in production and a rapid increase in exports.

Data from Intertek Testing Services, a cargo surveyor, and AmSpec Agri Malaysia, an inspection firm and cargo surveyors, showed that exports of palm oil products from Malaysia in the period August 1-20 rose between 13.6% to 17% compared with the same period the previous month.

The price of oil rose slightly on Thursday, as the U.S., which is the world's largest oil consumer, saw its crude oil and fuel inventory decline faster than expected. This supported the expectation for steady demand.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

Technical analyst Wang Tao said that palm oil could revisit its low of 4,450 Ringgit per metric tonne, which was reached on August 20, as the correction from 4,614 Ringgit appears incomplete.

(source: Reuters)