JAKARTA: Malaysian palm oil futures rose for a second straight session on Friday on bargain-hunting, but were set for a weekly drop due to sluggish exports and a stronger ringgit.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange climbed 2.01% to 3,857 ringgit ($911.60) per tonne by the midday break, adding to Thursday’s 0.75% gain.
So far this week, the contract has declined 0.90%. Palm advanced on continued bargain-buying, while the market eyed the narrowing discounts over competing oils, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group. “The uptick came following a recovery in CBOT soy oil futures overnight and in crude oil prices,” he said.
Soyoil prices on the Chicago Board of Trade rose 0.13%, extending a 0.40% gain overnight. The Dalian exchange is closed this week for the Lunar New Year celebration. Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Meanwhile, crude oil prices edged higher for a second straight session, buoyed by stronger-than-expected US economic growth and hopes of a rapid recovery in China demand.
Higher crude oil prices make palm oil more attractive as an alternative source of biodiesel feedstock. Malaysia maintained its February export tax for crude palm oil at 8% and raised its reference price, a circular on the Malaysian Palm Oil Board website showed on Thursday.
Exports of Malaysian palm oil products for Jan. 1-25 fell 28.4% to 876,193 tonnes from a month earlier, cargo surveyor Societe Generale de Surveillance said on Thursday.
Palm oil posts biggest loss in six weeks on weaker rival oils
The ringgit strengthened against the US dollar for a sixth straight session, making palm less attractive for dollar holders.
Palm oil may bounce more towards 3,888 ringgit per tonne, following its stabilisation around the support of 3,721 ringgit, the Dec. 12, 2022 low, Reuters technical analyst Wang Tao said.