Palm steady set to gain weekly on short covering
Malaysian palm futures rose slightly on Friday, and remain on track to achieve its first weekly increase in four weeks as investors closed their short positions. This helped to support the market.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery gained 2 ringgit or 0.04% to 4,448 Ringgit ($1,055.28) per metric ton. The contract is up 1.36% this week.
A Kuala Lumpur based trader stated that the rally in crude palm oil prices was likely driven by covering short positions.
The Chicago Board of Trade reported a 0.2% increase in soyoil. Dalian Commodity Exchange will be closed on October 1-8 due to public holidays.
As palm oil competes to gain a share in the global vegetable oils industry, it tracks the prices of rival edible oils.
The oil price rose after four consecutive sessions of declines, but was on course for its steepest weekly drop since late June because the market expected that OPEC+ could increase output despite concerns about oversupply.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
The palm ringgit's trade currency, the dollar, fell by 0.29%, making the commodity more affordable for buyers who hold foreign currencies.
Agrinas Palma Nusantara, Indonesia's palm oil state company, plans to build a biofuel complex in Papua to produce biodiesel exclusively from palm oil. This was revealed in an interview by CNBC Indonesia.
The Indonesian Trade Ministry urged the European Union, at the same time, to adopt the World Trade Organization panel's ruling that removes countervailing duty on Indonesian imports of biodiesel. Reporting by Ashley Tang, Editing by Subhranshu Sahu & Harikrishnan Nair. $1 = 4.2150 Ringgit.
(source: Reuters)
