Palm up on bargain buying, stronger ringgit; economic uncertainty limits gains
KUALA LUMPUR: Malaysian palm oil futures inched higher on Tuesday, and were set to snap six straight sessions of losses, supported by bargain buying but a stronger ringgit and continued economic uncertainty limited the gains.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange added 8 ringgit, or 0.2 per cent, to RM3,918 (US$895.5) a metric ton at the midday break.
Crude palm oil futures were higher due to bargain buying as prices are currently at a discount compared to soyoil, said Anilkumar Bagani, commodity research head at Mumbai-based brokerage Sunvin Group.
"Recovery in energy prices and soyoil along with improved demand from India has helped palm oil prices gain as well," he said.
However, Bagani said that a stronger ringgit and the ongoing global economic uncertainty continued to dampen the gains.
Dalian's most-active soyoil contract rose 0.65 per cent, while its palm oil contract lost 0.12 per cent. Soyoil prices on the Chicago Board of Trade (CBOT) were up 0.43 per cent.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Oil prices climbed in early trade as investors took advantage of Monday's losses to cover short positions, although concerns persisted over economic headwinds from tariffs that could dampen fuel demand.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit, palm's currency of trade, weakened 0.18 per cent against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.
Indonesia's crude and refined palm oil exports dipped nearly 2 per cent month-on-month in March as local consumption rose due to Ramadan. However, shipments remained at a four-year high in March.
Palm oil may fall further into the RM3,782-RM3,818 ringgit per metric ton range, as suggested by a projection analysis, Reuters technical analyst Wang Tao said.
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