Palm oil edges in narrow range, on track for rare weekly advance

what happened

Malaysian palm oil futures moved within a tight band on Friday, yet were still heading for a weekly rise, the first in three weeks, according to Reuters. The main January contract on the Bursa Malaysia Derivatives Exchange climbed 7 ringgit, or 0.16%, to 4,447 ringgit ($1,091.02) per metric ton by the midday break, and has added 3.95% so far in the current week.

Traders are holding back until leading analysts release fresh price views at the Indonesian Palm Oil Conference, a Kuala Lumpur-based trader told Reuters. Doubt over reports of a new service fee from Danantara Sumberdaya Indonesia is also weighing on sentiment, as the market waits for specifics on how the charge could hit the industry.

Dalian soyoil gained 0.31% and its palm contract rose 0.95%, while soyoil in Chicago advanced 0.3%. The ringgit slipped 0.15% against the dollar, nudging the commodity slightly lower in price for buyers using foreign currencies. Crude was mixed but set for a second weekly decline, as US plans to keep up its Iranian blockade reduced the odds of renewed large-scale fighting that could disrupt Middle East supply.

why it matters

Palm competes with other vegetable oils, so moves in soyoil feed directly into its pricing. Softer crude makes palm less appealing as a biodiesel feedstock, while a firmer ringgit would make the product pricier for overseas buyers. Reuters technical analyst Wang Tao sees a possible pullback toward 4,382 ringgit after palm failed to break resistance at 4,471 ringgit.

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