Malaysian palm oil futures continued their rise on Monday after climbing for the past two weeks, supported by strong gains in rival oilseed and crude oil prices. The benchmark December contract on the Bursa Malaysia Derivatives exchange closed 1.2 percent higher at 2,416 ringgit ($551.6) a tonne at the end of the trading session.
Prices reached a 15-month high of 2,460 ringgit on Tuesday after a rally that saw palm climb almost 20 percent last month. “Future crude palm oil prices may attempt to recoup Friday’s losses in view of strong gains in rival oilseed and energy fronts,” said a trader based in Kuala Lumpur. “However, the current strength in the ringgit and news from the Malaysian Palm Oil Board to temporarily halt palm product imports from Indonesia due to high stocks levels may hamper market sentiment and keep gains checked.”
Traded volume stood at 48,590 lots of 25 tonnes each, well above the average 35,000 lots usually traded in a day. A weaker ringgit, the currency palm is traded in, usually lends some support to palm prices. It has lost about 20 percent this year against the dollar, but rose 0.7 percent on Monday. The Malaysian and Indonesian governments had announced on Saturday a plan to set up an intergovernmental organisation of palm producers to ensure industry co-operation and prop up prices.
Industry traders and analysts, however, said this news had minimal impact on prices. On the technical front, palm oil is poised to break resistance at 2,464 ringgit a tonne, according to Wang Tao, Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the US December soyoil contract rose 1.7 percent. Crude oil futures rose on Monday after Russia said was ready to meet other producers to discuss the situation in the market, where prices have more than halved since last year. Palm oil often takes direction from crude oil, as vegetable oils are increasingly used in the making of renewable fuels.