Palm oil rises for third session, logs weekly gain
20/09/2024 (Reuters), Kuala Lumpur - Malaysian palm oil futures rose for a third straight session on Friday and logged a weekly gain, buoyed by strength in rival Dalian contracts, though weaker crude oil prices, a firmer ringgit and demand concerns capped the rise.
The benchmark palm oil contract FCPOc3 for December delivery on the Bursa Malaysia Derivatives Exchange closed 72 ringgit, or 1.86% higher at 3,948 ringgit ($940.00) a metric ton.
The contract gained 3.5% this week after falling for two consecutive weeks.
The recent strength in Malaysian palm oil futures means they have traded at a premium against other oils such as Northwest Europe sunflower oil and U.S. soybean oil, Maybank Research analyst Ong Chee Ting said in a note.
"However, the current high crude palm oil price is unsustainable as a wider discount against other major oils is needed to sustain demand, especially if the industry's peak output has been pushed back to Q4."
Dalian's most-active soyoil contract DBYcv1 rose 0.82%, while its palm oil contract DCPcv1 added 1.46%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.05%.
Palm oil tracks price movements of rival edible oils, as they compete for a share of the global vegetable oils market.
Oil prices eased on Friday, but were on track to register gains for a second straight week following a large cut in U.S. interest rates and declining global stockpiles.
Brent futures LCOc1 were trading 0.39% lower at $74.59 a barrel at 0956 GMT. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit MYR=, palm's currency of trade, strengthened 0.12% against the dollar, making the commodity more expensive for buyers holding foreign currencies and capping its gains.
Cargo surveyors estimate exports of Malaysian palm oil products rose between 6.8% and 10.1% during Sept. 1-20 compared to the same period a month ago.
Indonesia, the world's biggest palm oil exporter, will introduce a new set of monthly levies in a bid to improve competitiveness against rival edible oils, a regulation published on Thursday by its finance ministry showed.
Indonesia's palm oil exports are expected to decline this year due to increased domestic consumption because of a higher biodiesel blending mandate and a slight decrease in production, an industry official told Reuters on Thursday.