VEGOILS Palm gains strength on Dalian but still on course for a monthly drop

Malaysian palm oil futures are headed for their first monthly drop in four months, but prices have edged up a little bit after a three session slide. Prices were supported by gains in Dalian rivals as traders awaited the September export data to get fresh demand signals.

After posting its lowest closing in 10 weeks, the benchmark palm oil contract on Bursa Derivatives Exchange for December delivery rose 16 ringgit or 0.35% to 4,640 Ringgit ($1,137.12), a metric tonne, by midday. The contract is down?5.19% this month.

A Kuala Lumpur based trader said that after the sharp drop in recent sessions the market appeared?increasingly undersold, raising possibility of a reversal technical," adding that the contract also tracked Dalian vegetable oil higher.

Market participants will also "monitor the sentiment from the Globoil Conference in Mumbai and the full month September export data from cargo surveys for new direction."

Dalian's palm oil contract, which is the most active contract in Dalian, rose 0.6% while soyoil contracts increased by 1.25%. Chicago Board of Trade soyoil prices were down by 0.07%.

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

The oil prices rose on Wednesday after US President Donald Trump said he was not willing to 'ease sanctions on Iran, while Qatar called for peace talks.

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

A senior industry official said that palm oil may trade at a premium to soyoil by 2027, as El Nino threatens the production of biodiesel and Indonesia's top exporter tightens up supplies.

According to Wang Tao, a technical analyst, palm oil may test resistance at 4,677 Ringgit per ton after stabilising at 4,622 Ringgit.

(source: Reuters)