VEGOILS-Palm oil rises as supply concerns linger

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VEGOILS-Palm oil rises as supply concerns linger

By Fransiska Nangoy

JAKARTA, Jan 26 (Reuters)Malaysian palm oil futures rose on Wednesday, tracking rival oils higher, supported by lingering concerns over lower production.

The benchmark palm oil contract FCPOc3 for April delivery on the Bursa Malaysia Derivatives Exchange gained 0.36% to 5,301 ringgit ($1,265.76) per tonne by midday break, regaining some of the 0.42% drop in the overnight trade.

“Palm is very resilient, still trading firm despite lower export but I think everyone is worried about future supply,” a trader in Kuala Lumpur said.

Malaysia’s Jan 1-25 palm oil exports fell between 32.9% and 36.7% compared to the same period in December, cargo surveyors said on Tuesday.

Labour crunch at Malaysian palm oil plantations due to coronavirus border closures has led to production constrain and prices are expected to remain firm for at least the first half of the year, a Reuters poll showed this week.

The supply concern is also reflected in China’s Dalian market, the trader added.

Dalian’s palm oil contract DCPcv1 gained 1.08% and its most-active soyoil contract DBYcv1 rose 0.17% on Wednesday. Prices of soyoil on the Chicago Board of Trade BOcv1, however, were down 0.59%.

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

Meanwhile, top producer Indonesia ran an early testing for gasoline made from palm oil as the country aims to expand use of the vegetable oil in its domestic energy sector.

The palm benchmark may revisit its Tuesday low of 5,202 ringgit per tonne, as a correction triggered by the resistance at 5,366 ringgit looks incomplete, Reuters technical analyst Wang Tao said. TECH/C

($1 = 4.1880 ringgit)

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(Reporting by Fransiska Nangoy; Editing by Rashmi Aich and Shailesh Kuber)

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