By Mei Mei Chu
KUALA LUMPUR, Nov 18 (Reuters) – Malaysian palm oil futures reversed course to trade higher Thursday, underpinned by upbeat outlook about exports and output, although gains were capped by weaker crude prices.
The benchmark palm oil contract FCPOc3 for February delivery on the Bursa Malaysia Derivatives Exchange was up 24 ringgit, or 0.49%, at 4,923 ringgit ($1,177.89) by the midday break. It had fallen as much as 0.8%.
“Crude palm oil traded both sides of the market, pushed lower initially by fall in crude oil prices and bouts of profit-taking from hefty gains yesterday,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.
Firm trading on Dalian and persistent sentiment of tight supply is also offering some support, he added.
U.S. oil was under pressure, adding to an overnight plunge after a Reuters report that the United States was asking major oil consumers like China and Japan to consider a coordinated release of oil reserves to lower prices. O/R
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock. O/R
Dalian’s most-active soyoil contract DBYcv1 gained 0.8%, while its palm oil contract DCPcv1 rose 0.7%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may test a resistance at 4,962 ringgit per tonne, a break above which could lead to a gain to 5,048 ringgit, Reuters technical analyst Wang Tao said. TECH/C
The European Commission proposed a law on Wednesday aimed at preventing the import of commodities linked to deforestation, including palm oil and soy, by requiring companies to prove their global supply chains are not contributing to the destruction of forests.
The proposal is negative to palm exports but the antagonistic view from the E.U on palm is not something new, Varqa said.
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(Reporting by Mei Mei Chu; Editing by Rashmi Aich and Uttaresh.V)
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