Palm oil prices are rising
Malaysian palm oil futures rose on expectations of lower production, stronger holiday demand, and short-covering. March futures closed at 4,071 ringgit per tonne. Forecasted rains in Sarawak may reduce December output. Gains remain capped by weak demand, a stronger ringgit, high stocks, and South America’s record soybean harvest.
Malaysian palm oil futures rose on Tuesday, boosted by expectations of lower production and short-covering activity.
Expectations of stronger demand ahead of the holidays supported palm oil prices, according to a research note from Kenanga Futures. Higher exports in the second half of December could continue through the end of the year, the note notes, although concerns remain about rising inventories in Malaysia, which could limit price growth. Kenanga sets support and resistance levels for the March futures contract at 4,020 and 4,110 ringgit per tonne, respectively.
The benchmark palm oil contract FCPO1 for March delivery on the Bursa Malaysia Derivatives Exchange rose 24 ringgit, or 0.59%, to 4,071 ringgit (US$1,006.43) per metric tonne at the close of trading.
The market rebounded on signs that December output could be lower as more rain is expected in East Malaysia, particularly in Sarawak state, said Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari.
The Malaysian Meteorological Department said on Monday that a monsoon surge from January 1 to 5 could bring heavy rain to Sarawak, as well as strong winds and rough seas in the South China Sea.
“We are also seeing short-covering activity today ahead of the holidays,” Supramaniam said.
However, Supramaniam noted that weakening demand, a stronger ringgit and a record soybean harvest in South America would limit price increases.
The most actively traded soybean oil contract in Dalian rose 0.51%, while the palm oil contract rose 1.22%. Soybean oil prices on the Chicago Mercantile Exchange rose 0.02%.
Palm oil prices follow those of competing edible oils as it fights for share of the global vegetable oil market.
Oil prices remained virtually unchanged.
Higher oil futures prices make palm oil a more attractive feedstock option for biodiesel production.
The ringgit strengthened 0.32% against the dollar, making the commodity more expensive for buyers holding foreign currencies.
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Source : Ukr Agro Consult
