Palm oil trades at a tight range due to soyoil's spread.
The price of Malaysian palm oils futures was range bound on Wednesday as exports and soyoil firmed up, while palm oil's competitive disadvantage over soyoil continued to weigh.
At midday, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery gained 7 ringgit or 0.16% to 4,350 Ringgit ($1,036.21) per metric ton. The contract dropped 2.25% on Monday.
Crude palm futures were marginally higher due to strong export performances and higher Chicago soybean prices, according to David Ng, a proprietary trading at Kuala Lumpur based trading firm Iceberg X Sdn Bhd.
The narrowing of the spread between soybean oil and palm oil also weighs on palm oil prices.
Exports of palm oil-based products from Malaysia for the period September 1-20 rose between 8.3% to 8.7% on a monthly basis, according to cargo surveyors.
Dalian's soyoil contract with the highest volume fell by 0.34% while palm oil contracts increased by 0.04%. Chicago Board of Trade soyoil prices rose 0.12%.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price fluctuations of competing edible oils.
The price of oil rose for the second day in a row as a report from the industry showed that crude inventories in the United States fell last week. This heightened concerns about a tightening supply.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
Dorab Mistry, an industry analyst, said that Malaysian palm futures will likely jump by 27%, reaching a record high of more than 5,500 ringgits per ton between January and March 2026. This is due to the tightening supply in Indonesia, the top producer.
The European Union has delayed a second time the launch of its anti-deforestation legislation, delaying for an additional year the import ban on commodities like palm oil which are linked to forest degradation.
Technical analyst Wang Tao stated that palm oil could extend its gains to 4,401-44,429 ringgits per ton after stabilising around a zone of support between 4,274-4.309 ringgits. ($1 = 4.1980 ringgit)
(source: Reuters)
