Palm vegoils gains on weakening ringgit but is set to end its three-week rally

Malaysian palm oil futures rose on Friday due to a weaker ringgit. However, they are on course for their first weekly decline in four weeks, as a result of uncertainty over the Middle East war and crude oil outlook.

By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for June delivery had risen 19 ringgit (0.41%) to 4,602 Ringgit ($1,149.06), a metric tonne. The contract has fallen 0.30% this week.

Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that the market is pricing in uncertainty regarding the war and crude oil's future direction, as well as the weakening Ringgit.

Dalian's palm oil contract, which is the most active contract in Dalian, grew by 1.38%. Prices of soyoil on the Chicago Board of Trade rose by 0.1%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price fluctuations of competing edible oils.

After U.S. president Donald Trump announced that talks to end war with Iran are going well, and that he will pause attacks against the country's energy plants for 10 days, oil prices dropped.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

The palm ringgit's currency of trade has weakened by 0.33% against dollars, making it cheaper for buyers with foreign currencies.

Malaysia, which is a major exporter of palm oils, has taken'measures to shore-up fertiliser supply' after the Middle East conflict and China’s export restrictions, which have driven up raw material prices, and created a supply crunch in Malaysia.

(source: Reuters)