Palm oil price up for third day ahead of data, budget

The benchmark palm oil contract for the December delivery on the Bursa Malaysia Derivatives Exchange was last up 0.7% at 2,175 ringgit ($518.85) per tonne at the close of trade at 1000 GMT, its biggest daily gain since Oct. 1.

KUALA LUMPUR: Malaysian palm oil futures rose on Tuesday to mark a third straight day of gains, as traders expected a slower than forecast pace of growth in monthly output and awaited cues from the country’s national budget announcement for next year.

The benchmark palm oil contract for the December delivery on the Bursa Malaysia Derivatives Exchange was last up 0.7% at 2,175 ringgit ($518.85) per tonne at the close of trade at 1000 GMT, its biggest daily gain since Oct. 1.

“We’re seeing that the production rise in Malaysia is less than expected,” said a Kuala Lumpur-based futures trader, explaining that data from the Malaysian Palm Oil Association only showed a slight increase in September’s monthly output.

A Reuters survey showed that Malaysian palm oil stockpiles in September likely rose for the first time in seven months, as production grew and export demand eased for the edible oil.

The survey also showed that output could rise 4.6% to 1.91 million tonnes, while exports are seen falling 19.4% to 1.40 million tonnes in September.

“The market is mostly waiting for reports,” said another futures trader, referring to the MPOB data and Malaysia’s national budget announcement.

The MPOB will release official data on palm oil inventories, exports and output for September on Thursday.

Meanwhile, Malaysia’s government will likely present an expanded budget on Friday to temper a weak economic outlook, as it grapples with global recession fears, the protracted U.S.-China trade war and a large debt pile left behind by its predecessors.

Palm oil is due for a sharp move, as its consolidation within a wedge is ending, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

In other related edible oils, U.S. soyoil futures on the U.S. Chicago Board of Trade fell by 0.5%, while the January soyoil contract on the Dalian exchange rose 1%.

The Dalian January palm oil contract also rose 0.7%.

Palm oil is impacted by price movements in related oils, as they compete for a share in the global vegetable oils market. – Reuters

Source : The Star