Palm oil surges due to stronger Dalian oil and weaker ringgit

After a long weekend of holidays, the palm oil futures in Malaysia extended their gains for a third consecutive session on Tuesday. The weaker ringgit and stronger Dalian oils supported this.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for July delivery had gained 81 Ringgit or 2.12% to $3,895 ringgit (US$900.58) per metric ton.

The contract rose by as much as 3.2% in the first session. This was its largest daily gain since the 7th of March, when the Malaysian market reopened on Monday after Vesak.

"The premium of soyoil over palm oil has increased, and now exceeds $100 per ton in forward-month shipments. A Mumbai-based trader said that this should lead to higher demand in the months of peak production.

The trader said that the rising soyoil price will support palm oils, despite increased Malaysian palm stock.

The palm oil stock in Malaysia increased for the second consecutive month in March, increasing 19.4% to reach 1.87 million metric tonnes, according to data released by the industry regulator on Tuesday. This was due in part to a strong recovery in production.

According to cargo surveyor, palm oil exports from the second largest producer in the world likely dropped 9.0% between May 1-10.

Intertek Testing Services

Meanwhile, independent inspection company

AmSpec Agri Malaysia

Estimated exports for the same period increased by 0.6%.

Dalian's palm oil contract, which is the most active contract, rose by 1.01%. Prices of soyoil on the Chicago Board of Trade decreased by 0.1%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the prices for rival edible oils.

The palm ringgit's trade currency, the U.S. Dollar, fell by 0.72%, lowering the price of the commodity for buyers with foreign currencies.

(source: Reuters)