Palm Oil Rallies on Stronger Demand

PALM oil gained yesterday on signs demand for the world’s cheapestcooking oil continues to strengthen, and as a weakening dollar boosted the investment appeal of commodities as a hedge against inflation. February-delivery palm oil rose as much as 1.6 per cent to RM2,518 a metric ton, the highest level since August 18, and traded at RM2,482 at 3.30 pm close in Kuala Lumpur. Palm oil is headed for a fourth weekly advance. “It will be interesting to see whether producers look to sell into this strength, or hold out for higher prices,” Scott Briggs, the agricultural commodities strategist at Australia and New Zealand Banking Group Ltd, said in Melbourne.

Exports from Malaysia, the second-largest producer, rose 6.4 per cent to 1.18 million tons in the first 25 days of this month compared with October, Societe Generale de Surveillance, an independent cargo surveyor, said. The gains were led by India. Overseas sales rose 1.2 per cent to 1.13 million tons in the first 25 days of November, another surveyor Intertek said. Other farm commodities including corn and soybean oil, a direct rival to palm oil, also climbed as the dollar weakened against a basket of six currencies. While investors are driven to agricultural commodities by the threat of inflation, “in the last week, equity markets and the dollar have struggled to send a strong signal either way on economic expectations,” Briggs said. “Commodity prices will continue to be choppy until they do.” Technical charts indicate crude palm oil may soon retest the RM2,500 resistance level, RHB Research Institute said November 23. The commodity may find support at RM2,200, the report said. The relative strength index has held at more than 70 since November 20, a level some investors use to indicate prices are about to drop, and was last at 74.42. Source : Business Times

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