Palm prices rise on the back of bargain-buying; 3 weeks of losses to be erased

Malaysian palm oil futures rose on Friday due to some bargain-buying?after a steep drop following the announcement of a new Indonesian export monitor system earlier in the week.

By midday, the benchmark 'palm oil contract' for August delivery on the Bursa Derivatives exchange had gained 40 ringgit (0.9%), to 4,498 Ringgit ($1,135.29) per metric ton.

Futures are on track to achieve their first weekly profit after three weeks of consecutive losses.

Anilkumar bagani, head of commodity research at Mumbai-based Sunvin Group, said that the market was waiting for clarity on the new Indonesian Export Monitoring System.

He said that the market is worried Indonesia will'start pushing for more palm oil exports until the new system is in place and cap the upward momentum of prices.

Dalian's palm oil contract, which is the most active contract in Dalian, fell 1.65% while soyoil prices dropped 0.85%. Chicago Board of Trade soyoil prices were up by 0.35%.

Palm oil follows the price movement of competing edible oils as it competes to gain a share of global vegetable oils market.

Investors doubted that the U.S. peace talks with Iran would be successful, and so oil prices rose on Friday.

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

Officials from the Malaysian Palm Oil Board said that the industry was concerned about Indonesia's plans to centralise the exports of key commodities, including palm oils, which could disrupt the export flow and affect the market sentiment temporarily during the transition period.

Exports of Malaysian palm oil products fell between 13.9% to 20.5% in the month from May 1-20, according to cargo surveyors.

The dollar and the ringgit traded at a flat rate. $1 = 3.9620 Ringgit (Reporting and editing by Harikrishnan Nair, Mrigank Dhaniwala).

(source: Reuters)