VEGOILS - Palm up on export data, stronger rival oil, and rising production; stocks, stock gains, and rising output.

The price of Malaysian palm oil futures rose on Wednesday due to higher prices for rival edible oils, as well as relatively positive export data. However, the gains were limited by increasing production and inventory levels.

At the midday break, the benchmark palm oil contract on Bursa Derivatives exchange for August delivery had increased by 8 ringgit (0.2%), to 3,916 Ringgit ($917.10) per metric ton. The contract has risen for two sessions in a row.

A Kuala Lumpur based trader stated that the price of crude palm oil futures increased due to the strength on the oilseeds and export market.

The trader said that the rising stock and production levels had capped the prices.

Dalian's soyoil contract with the highest volume increased by 0.18%. Palm oil contracts also rose by 0.3%. The Chicago Board of Trade saw a 0.79% increase in soyoil prices.

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

Exports of palm oil products from Malaysia during the period May 1-20 increased between 1.6% and 5.3 % compared to the same period one month earlier.

The palm ringgit's currency has strengthened by 0.58% in relation to the U.S. Dollar, increasing the price of the commodity for foreign buyers.

The oil price jumped by more than 1% following reports that Israel was preparing to strike Iranian nuclear facilities. This sparked fears of a possible conflict disrupting the Middle East's key production region.

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

The Malaysian Palm Oil Council stated that the price of crude palm oil is expected to fluctuate between 3,750-4 050 ringgits in May, before recovering gradually amid the volatility on the vegetable oil and the energy markets.

Wang Tao, a technical analyst, said that palm oil could retrace back to 3,866 Ringgit after failing to break through resistance at 3,946 Ringgit.

(source: Reuters)