KUALA LUMPUR: Palm oil headed for a second week of gains on supply concerns and as a weaker Malaysian currency made it cheaper for overseas buyers.
The ringgit was on track for a weekly loss as a renewed spike in domestic coronavirus cases and political uncertainty put investors on guard.
Still, the palm oil market remains vulnerable to a sell-off on worries about exports and a decline in soybean oil’s premium over palm oil.
“Palm oil futures are volatile, ” said Sathia Varqa, owner of Palm Oil Analytics in Singapore. “There are some bullish factors such as a lower production outlook and tighter stockpiles in the last quarter of 2020.”
“However, exports to India will taper off in November after the festival-season buying and palm’s narrowing spread to soybean oil may make the tropical oil less competitive, ” he said.
"On the technical front, prices are looking increasingly weak as they failed to sustain above the 3,000 ringgit mark, ” said Gnanasekar Thiagarajan, head of trading and hedging strategies at Kaleesuwari Intercontinental. The market is headed toward near-term support of 2,670-2,725 ringgit, he said.
Palm for January, the contract with the biggest volumes and open interest, +1.1% to 2,897 ringgit/ton by midday break on Bursa
Malaysia DerivativesContract for December delivery 0.9% to 2,843 ringgit/tonPalm +1.1% so far this week after gaining 7.5% last week.
Soybean oil for December in Chicago +0.4% to 33.31c/lb
Palm for January on Asia Pacific Exchange in Singapore rises 0.6% to $726/ton.
Refined palm oil for January on Dalian Commodity Exchange -1% to 6,080 yuan/tonSoybean oil for January -0.9% to 7,026 yuan/tonPalm’s premium over gasoil ~$364/ton vs avg of ~$197 in past year: data compiled by Bloomberg. - Bloomberg