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Palm jumps tracking Dalian rivals higher despite weak fundamentals

KUALA LUMPUR: Malaysian palm oil futures jumped on Wednesday, tracking gains in rival oils on the Dalian Commodity Exchange after China urged citizens to stock up daily essentials for winter.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange climbed 2.07% to 5,073 ringgit ($1,221.82) a tonne, to its highest in two weeks.

The market watched Dalian closely for an insight into China’s stock-up directive, traders said.

A trader in Kuala Lumpur said China’s move kept edible oils strong, with buying momentum in Dalian palm olein pushing Malaysian palm prices higher.

“We are not bullish, with exports dropping, higher end stocks and better production. But we will still track Dalian movements,” another trader said.

Palm up after China urges citizens to stock up on food

Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker, said lack of destination demand due to persistent higher prices and narrowed spread over soft oils was also weighing on the palm oil market.

“On the destination front, China was quiet in the palm oil market as Dalian palm olein futures were wildly fluctuating,” he said, noting that the Chinese government’s directive led to some bullish recovery in Dalian and Malaysian palm oil contracts but that is not enough to hold the gains.

Dalian’s palm oil contract climbed 2.79%, while the most active soyoil contract was up 2.35%. Soyoil prices on the Chicago Board of Trade rose 0.31%.

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

Palm oil may retest a resistance at 5,048 ringgit per tonne, a break above which could lead to a gain to 5,187 ringgit, Reuters technical analyst Wang Tao said.

Palm jumps tracking Dalian rivals higher despite weak fundamentals

Source: Brecorder

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