Palm oil extends gains amid weather woes at oilseeds plantations
07/05/2024 (Reuters), Singapore - Malaysian palm oil futures rose on Tuesday for a second session, tracking sustained gains in soyoil amid poor weather in Brazil and Russia, while key palm producer Indonesia's adverse weather conditions also supported palm prices.
The benchmark palm oil contract FCPOc3 for July delivery on the Bursa Malaysia Derivatives Exchange rose 60 ringgit, or 1.55%, to 3,922 ringgit ($827.43) a metric ton by midday break.
After the massive sell-off of Malaysian palm oil in April, the market is re-pricing itself amid weather vagaries in Brazil and Indonesia impacting edible oils, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Worries over soybeans shortage amid potentially crop-damaging weather in Brazil and Russia are pushing soyoil prices higher.
Indonesia's meteorological agency warned of potential extreme weather events occurring in the country from May 7-13 such as tornadoes and thunderstorms leading to floods and landslides.
About 64% of Indonesia will experience dry season from May to August this year, Malaysia-based Bernama reported on Saturday, quoting Indonesia's meteorological agency. Hot weather negatively affects palm yields.
Dalian's most-active soyoil contract DBYcv1 rose 1.74%, while its palm oil contract DCPcv1 climbed 2.19%. Soyoil prices on the Chicago Board of Trade BOcv1 increased 0.5% after settling 1.76% higher on Monday.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil prices ticked up after Israel struck Rafah in Gaza even as negotiations for a ceasefire with Hamas continued without resolution. O/R
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The Malaysian ringgit MYR=, palm's currency of trade, weakened 0.06% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.
Palm oil may test resistance at 3,926 ringgit per ton, with a good chance of breaking above this level and rising towards 3,969 ringgit, said Reuters technical analyst Wang Tao. TECH/C
($1 = 4.7400 ringgit)