Palm oil extends gains for a second day as rival vegetable oils firm

what happened

Malaysian palm oil futures climbed on Wednesday for a second session running, lifted by stronger rival vegetable oils traded in Dalian and Chicago, according to Reuters. The January contract on the Bursa Malaysia Derivatives Exchange added 16 ringgit, a gain of 0.33%, to 4,833 ringgit ($1,184.70) per metric ton in early dealings.

Dalian's most-active soyoil contract rose 0.49%, while its palm oil contract gained 1.31%. Soyoil on the Chicago Board of Trade was up 0.25%. Analysts note that palm competes with other edible oils for a share of the global market. Surveyors estimated Malaysian palm product exports for October 1 to 20 jumped 58.5% to 78.4% from a month earlier.

Crude prices also inched higher on worries about Middle East supply, with traders watching Red Sea shipping risks and threats to Saudi oil facilities. Dearer crude makes palm more appealing as biodiesel feedstock. Reuters technical analyst Wang Tao said prices may slip back to the 4,706 to 4,736 ringgit range after failing to break resistance at 4,834 ringgit.

why it matters

Palm oil trades alongside soy and rapeseed oil as substitutes, so moves in those markets feed quickly into its price. Higher crude supports biodiesel demand, while the export jump points to firm buying from importers.

tags

instruments