VEGOILS-Palm heads for second weekly gain on stagnant output, stronger rival oils
19.01.2024 (Nasdaq) - KUALA LUMPUR, Jan 19 (Reuters) - Malaysian palm oil futures rose on Friday, heading for a second straight week of gains, underpinned by stagnant production and strength in rival edible oils.
The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange rose 21 ringgit, or 0.54%, to 3,919 ringgit by midday. The contract has gained 1.56% so far for the week.
Malaysian palm oil futures witnessed a supply-induced rally as production in the world's second-biggest producer remains precariously low, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
"Until we see a recovery in production, prices will continue to rise," Supramaniam said, adding that good buying interest from key importer China was also helping prices maintain momentum.
Malaysia's crude palm oil production is seen at 18.75 million tons in 2024, up 1% from last year, as the labour situation improves in the world's second-biggest producer, a Reuters survey showed on Thursday.
Dalian's most-active soyoil contract DBYcv1 edged up 1.69%, while its palm oil contract DCPcv1 gained 2.29%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.06%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Crude oil prices drifted lower on Friday after rallying the day before, as geopolitical tensions and disruptions in U.S. oil production from a cold blast were countered by concerns over slow demand growth in China and ample supply forecasts. O/R
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit MYR=, palm's currency of trade, rose 0.02% against the dollar, making the commodity more expensive for buyers holding foreign currency.
Palm oil may retest resistance at 3,904 ringgit per metric ton, a break above could lead to a gain into the 3,929-3,953 ringgit range, Reuters technical analyst Wang Tao said. TECH/C
(Reporting by Danial Azhar; Editing by Subhranshu Sahu and Mrigank Dhaniwala)