Palm oil heads for weekly gain on supply worry, ringgit fall

On the technical front, prices are looking increasingly weak as they failed to sustain above the 3,000 ringgit mark.

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

Source : The Star

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