Palm oil rises on speculative buying, short covering
14/10/2024 (Reuters), Kuala Lumpur - Malaysian palm oil futures rose on Monday, supported by a combination of speculative buying and short covering, although gains were capped by weaker crude oil prices.
The benchmark palm oil contract FCPOc3 for December delivery on the Bursa Malaysia Derivatives Exchange rose 22 ringgit, or 0.51%, to 4,372 ringgit ($1,018.88) a metric ton by the midday break.
The contract had gained 2.76% in the previous session.
There is a combination of speculative buying and short covering in the market today, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
"Though we are seeing the lower estimates for Malaysian production, Indonesian production are rocketing ahead with a double digit growth. This could cap gains once the speculative buying wanes off," he said.
Dalian's most-active soyoil contract DBYcv1 rose 0.36%, while its palm oil contract DCPcv1 climbed 2.06%.
However, soyoil prices on the Chicago Board of Trade BOcv1 were down 0.55%, following a drop in the CBOT soybeans contract Sv1 on expectations of a record U.S harvest GRA/.
Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
The ringgit MYR=, palm's currency of trade, weakened 0.16% against the dollar.
Oil prices fell on Monday after data showed China's inflation rate declined and a lack of clarity on the country's economic stimulus plans stoked fears about fuel demand in the world's biggest crude importer. O/R
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
India's palm oil imports in September fell by nearly a third from a month ago because of higher prices, hitting a six-month low, while sunflower oil imports plunged to a ten-month low, the Solvent Extractors' Association of India said on Friday.
Palm oil may test a resistance zone of 4,406 ringgit to 4,432 ringgit per ton, a break above which could open the way towards 4,483 ringgit, Reuters technical analyst Wang Tao said. TECH/C