Palm oil rises as Chicago soyoil and crude oil strengthen
The price of Malaysian palm oils futures increased on Tuesday as a result of higher Chicago crude oil and soyoil prices. A weaker ringgit was also a factor.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for February delivery had gained 38 ringgit or 0.93% to 4,132 Ringgit ($1,000.48).
CPO opened higher on the morning session, thanks to news that China had purchased U.S. soya beans. The sentiment was also boosted by higher crude oil price, said David Ng. He is a proprietary trader with Kuala Lumpur based trading firm Iceberg X Sdn. Bhd.
Chicago soybean futures rose as traders assessed China's pace of U.S. soya bean purchases following the trade truce that Beijing and Washington reached in late October.
Dalian's palm oil contract was up 0.72%, but its most active soyoil contract barely moved, only gaining 0.05%. Chicago Board of Trade soyoil prices increased by 0.5%.
As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.
The price of crude oil held steady in the early trading session on Tuesday, as traders assessed risks arising from Ukrainian drone attacks on Russian energy sites and mounting tensions between the United States and Venezuela. They also had mixed expectations about U.S. fuel stocks.
The Malaysian Ringgit, the currency used by palm to trade its products, fell 0.1% on the day against the U.S. Dollar, making it cheaper for holders of foreign currencies.
GAPKI, the largest Indonesian palm oil association, said that it had not yet seen any major impacts on palm oil production following the flooding on Sumatra.
Technical analyst Wang Tao says that palm oil could retrace to the range of 4,013-4 041 ringgit for metric tons, after failing to break through resistance at 4,121.
(source: Reuters)
