Palm gains on rival oil strength

December 22, 2021: Malaysian palm oil futures extended gains to a second session on Wednesday, tracking gains in rival oils and crude oil prices.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange rose 1.16% to 4,435 ringgit ($1,054.70) in early trade.

On Tuesday, it gained 2.21% in its best session in two weeks, buoyed by concerns of harvest being disrupted by floods in Malaysia and an import tax cut by key buyer India. The contract gained 0.48% in overnight trade.

FUNDAMENTALS

Dalian's soyoil contract for May delivery rose 1.78% while its palm oil contract gained 2.22%. Soybean oil prices on the Chicago Board of Trade for May delivery were up 0.39%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Oil prices rose again as the dollar slipped, with risk appetite returning as some governments resist imposing lockdowns to curb the spread of the Omicron COVID-19 variant and as China said it would be able to sustain economic growth.

Stronger crude oil futures typically make palm a more attractive option for biodiesel feedstock.

Palm oil may bounce more into a range of 4,480-4,555 ringgit per tonne, following its stabilisation around support at 4,296 ringgit, said Reuters technical analyst Wang Tao.

Reuters