Malaysian palm oil price extends gains on weak ringgit, biodiesel demand hopes


The palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose as much as 0.82 percent to 2,568 ringgit a tonne, its highest since May 19, 2014, before settling down 0.6 percent 2,531 ringgit ($610.62) per tonne. Traded volume stood at 48,968 lots of 25 tonnes each.

MUMBAI: Malaysian palm oil futures extended gains on Tuesday on a drop in the ringgit and hopes that top producing countries will now use more tropical oil for biodiesel production.

    The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 0.24 percent at 2,543 ringgit ($620.24) per tonne by midday, after rising 1.2 percent on Monday.
    Palm earlier on Tuesday rose to 2,551 ringgit, the highest since Feb. 29. 
    "It seems Malaysia and Indonesia are determined to increase palm oil blending in biodiesel. It will help in bringing down inventory in coming months," said a Kuala Lumpur-based trader.
    Indonesia and Malaysia are the world's top two palm oil producing countries.
    Malaysia was confident that it would implement its programme
in 2016 for biodiesel to have a bio-content of at least 10
percent, Plantations Minister Douglas Uggah Embas said at a palm
oil conference in Kuala Lumpur. 
    The overnight rally in crude oil prices and a weak ringgit
are also supporting palm oil, said another dealer based in Kuala
Lumpur.
    The Malaysian currency lost 0.4 percent versus the
dollar, making the tropical oil, which is priced in the ringgit,
cheaper for holders of other currencies.
    Oil prices fell on Tuesday on weak Chinese trading data, but
Brent remained over $40 a barrel after jumping to 2016 highs the
previous day as producers announced talks to support the market
and investors opened new bullish bets. 
    Traded volume stood at 6,993 lots of 25 tonnes each,
significantly below the roughly 13,500 lots usually traded by
midday.
    "Before taking large position traders want to know what
industry officials say in palm oil conference," said a
Mumbai-based trader, referring to the conference in Kuala Lumpur
from March 7 to March 9.
    Palm oil is expected to test resistance at 2,559 ringgit per
tonne, a break above which could open the way to the next
resistance at 2,580 ringgit, said Wang Tao, Reuters market
analyst for commodities and energy technicals. 
    In competing vegetable oil markets, the May soybean oil
contract on the Dalian Commodity Exchange rose 0.21
percent, while the Chicago soyoil contract was unchanged.

  Palm, soy and crude oil prices at 0549 GMT                    
                                                                
 Contract          Month   Last   Change  Low     High   Volume
 MY PALM OIL        Mar-6   2498       3    2498   2498        7
 MY PALM OIL        Apr-6   2524       3    2520   2530       65
 MY PALM OIL        May-6   2543       6    2536   2551     5509
 CHINA PALM OLEIN   May-6   5120      30    5050   5184  1218464
 CHINA SOYOIL       May-6   5718       8    5680   5776   535056
 CBOT SOY OIL       May-6  31.14     0.5   31.03  31.32     3127
 INDIA PALM OIL     Mar-6  489.4     0.5     486  491.5      229
 INDIA SOYOIL       Mar-6  609.1     0.5     606  609.5     1860
 NYMEX CRUDE        Apr-6  37.51   -0.39   37.35  37.99    25020
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel
 ($1 = 4.1000 ringgit)
 ($1 = 67.2875 Indian rupees)
 ($1 = 6.5067 Chinese yuan)
- Reuters
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