Palm oil rises against stronger rival Soyoil

Malaysian palm futures prices rose on Monday after two sessions of declines. Supported by higher rival soyoil price, they ended a downward trend.

At midday, the benchmark contract for palm oil delivery in August on the Bursa Derivatives exchange gained 41 ringgit or 1.07% to 3,856 Ringgit ($895.08) per metric ton.

A Kuala Lumpur based trader reported that crude palm oil futures had been trading higher due to a recovery in the strength of rival oilseeds markets.

Dalian's palm oil contract, which is the most active contract, gained 0.2% while soyoil prices rose by 0.52%. Chicago Board of Trade soyoil prices rose 0.55%.

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

The palm ringgit's trade currency, the dollar, fell by 0.37%, lowering the price of the commodity for buyers who hold foreign currencies.

The oil prices fell, due to the downgrading of the U.S. government's credit rating by Moody's and the official data showing a slowdown of China's retail sales and industrial output.

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

The Indonesia Palm Oil Association has urged the government not to increase the palm oil export tax, warning that it could hurt the country's competitiveness in an uncertain global market due to U.S. Tariffs and geopolitical tensions.

Technical analyst Wang Tao stated that palm oil could drop a little more to 3,763 Ringgit per metric tonne, at the bottom of wave b.

(source: Reuters)