SINGAPORE: Malaysian palm oil futures rose for a third consecutive session on Thursday on expectations for higher biofuel demand, though a stronger ringgit and cheaper rival oils capped gains.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange rose 0.7% to 2,338 ringgit ($559.06) per tonne at 0233 GMT.

Dalian’s January palm oil contract was down 0.2% on Thursday, while the January soyoil contract was 0.5% lower.

Elsewhere, U.S. soyoil futures on the Chicago Board of Trade last traded flat on Thursday.

A Kuala Lumpur-based trader told Reuters that biofuel demand from Indonesia and Malaysia probably provided underlying support to prices, adding that whether or not the “surprise” uptick can sustain will depend on the prices of rival oils.

Palm oil is affected by price movements in related oils as they compete for share in the global vegetable oils market. The ringgit was up 0.1% against the dollar on Thursday, making the edible oil more expensive for holders of foreign currencies.

“Palm oil prices are going in the direction of a broader uptrend backed by lower production and expectations of higher biodiesel consumption by B20 in Malaysia and B30 in Indonesia next year,” said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil broker.

Bagani is referring to plans by Malaysia to require fuel to have 20% bio-content in the form of palm oil and Indonesia to require 30%.

Malaysia said earlier this week that implementation of biofuels mandates in Malaysia and Indonesia will increase consumption of palm oil up to 1.3 million tonnes and 10 million tonnes per year, respectively, adding that the two countries will challenge a European Union law that will limit palm oil use in biofuels.

FUNDAMENTALS

* Chicago wheat futures rose for a second session on Thursday with prices underpinned by strong demand and tightening world supplies.

* Oil prices dipped on Thursday on lingering concerns about a weak demand outlook, after surging more than 2% in the previous session after a surprise draw in U.S. crude stocks.

MARKET NEWS * Asian shares pulled ahead on Thursday with corporate earnings buffeting trading as investors remained anxious about the business impact of the Sino-U.S. trade war while Brexit uncertainties kept overall sentiment in check.

* U.S. stocks edged higher on Wednesday as investors shrugged off lacklustre quarterly reports from industrial bellwethers Boeing Co and Caterpillar Inc, though a lower-than-expected revenue outlook from Texas Instruments Inc sent chipmakers’ shares lower.

* The British pound stabilised on Thursday as the Brexit project entered a fresh holding pattern, while the dollar held firm as traders took a breather from Sino-U.S. trade headlines. – Reuters

Earlier report

Malaysian palm oil price at 8-month high as rival oils strengthen

KUALA LUMPUR: Malaysian palm oil futures closed at an eight-month high on Wednesday, buoyed by sharp gains in rival oils, though a slightly stronger ringgit and worries over demand from India capped gains.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed 0.3% higher at 2,323 ringgit ($554.95) per tonne, after rising to their highest in 16 months at during the session.

Strength in soyoil and palm oil on the Dalian Commodity Exchange, coupled with a weaker ringgit, outweighed worries around a boycott by Indian buyers, a Kuala Lumpur-based trader told Reuters.

But the ringgit last edged slightly higher towards the end of the session, up 0.02% against the dollar, limiting gains.

Dalian’s January palm oil contract rose 1.7%, while the January soyoil contract climbed 0.7%.

Elsewhere, U.S. soyoil futures on the Chicago Board of Trade were down 0.3%.

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

Palm slipped to as low as 2,263 ringgit in the previous session after India’s top vegetable body asked its members to stop buying the edible oil from Malaysia over Prime Minister Mahathir Mohamad’s comments on Kashmir.

Some Indian traders said refiners had already stopped buying Malaysian palm oil for shipment in November and December, fearing higher import taxes or other measures. – Reuters

Source : The Star