Palm oil gains on Chicago soyoil, inventory data awaited

JAKARTA: Malaysian palm oil futures rose on Wednesday, after two sessions of losses, mirroring movement in the Chicago soyoil market while the market awaits data from the Malaysian Palm Oil Board.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 21 ringgit, or 0.48%, to 4,370 ringgit ($983.13) a metric ton by the midday break.

“The futures will try to recover some of yesterday’s drop before resuming its direction while waiting for next Monday’s MPOB data,” a Kuala Lumpur-based trader said.

The Malaysian Palm Oil Board is scheduled to release its monthly data on March 10.

Soyoil prices on the Chicago Board of Trade (CBOT) rose 0.58%, while Dalian’s most active soyoil contract fell 1.16%, and its palm oil contract lost 1.3%. Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.

Malaysia’s palm oil inventories are forecast to fall in February to their lowest in nearly three years due to production disruptions caused by floods, a Reuters survey showed.

China swiftly retaliated against fresh US tariffs imposed on Tuesday, hiking import levies covering $21 billion worth of American agricultural and food products and moving the world’s top two economies a step closer towards an all-out trade war.

Meanwhile, India’s palm oil imports rose 36% on-month in February after falling to their lowest since March 2011 in January, according to estimates from dealers.

Oil prices fell for a third session on Wednesday as plans by major producers to raise output in April combined with concerns that US tariffs on Canada, Mexico and China will slow economic and fuel demand growth hammered investor sentiment.

Palm oil futures tumble

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

The ringgit, palm’s currency of trade, strengthened 0.36% against the US dollar, making the commodity slightly more expensive for buyers holding foreign currencies.

Palm oil may fall into the 4,183 ringgit-4,264 ringgit per metric ton range, as it has broken support at 4,360 ringgit, Reuters technical analyst Wang Tao said.