Palm gains slightly but headed for another yearly decline

-A +A

KUALA LUMPUR (Dec 31): Malaysian palm oil futures saw slight gains by Monday noon on firm crude oil and US soyoil prices, but were on track to chart a second consecutive year of declines as high stocks and weak demand weighed on prices.

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 0.2% at RM2,126 (US$514.02) a tonne at the midday break, on course for a third straight session of gains.

The market had earlier climbed as much as 0.9% to a one-week high of RM2,140, but later pared some gains on a stronger ringgit and profit-taking, traders said.

Trading volumes stood at 8,910 lots of 25 tonnes each at the midday break on Monday.

"Palm is borrowing strength from gains in rival oilseeds and the energy front," a Kuala Lumpur-based trader said, referring to US soyoil on the Chicago Board of Trade and crude oil prices.

"Further appreciation in the local currency and profit-taking interest may cap upside movements."     

Gains in the ringgit, palm's traded currency, usually make the edible oil more expensive for foreign buyers. The ringgit had strengthened by 0.3% to its strongest levels in three months, and was last at 4.1360 per dollar on Monday noon.

Oil prices climbed on the last trading day of the year on Monday, taking a cue from firmer stock markets, but were on track for the first yearly decline in three, amid concerns of a persistent supply glut.

Palm oil prices are impacted by movements of crude oil, as the vegetable oil is used as feedstock to make biodiesel.

In other related oils, the Chicago January soybean oil contract was up 0.4%, in line with gains in soybean prices.

US soybean futures climbed to their highest in more than a week on Monday, buoyed by hints of improved trade relations between Washington and Beijing that could boost China's soybean purchases.

Palm oil prices are impacted by changes in soyoil prices, as they compete for a share in the global vegetable oil market.  

Palm, soy and crude oil prices at 0435 GMT:

Contract           Month    Last  Change     Low   High  Volume
MY PALM OIL       JAN9      2017   +4.00    2012   2028      80
MY PALM OIL       FEB9      2082   +7.00    2073   2092     911
MY PALM OIL       MAR9      2126   +5.00    2118   2140    4748
CHINA PALM OLEIN  JAN9         0   +0.00 0 0 0
CHINA SOYOIL      JAN9         0   +0.00 0 0 0
CBOT SOY OIL      JAN9     27.64   +0.12   27.59  27.64    2747
INDIA PALM OIL    DEC8    502.50   -0.40  502.50  502.5       2
INDIA SOYOIL      JAN9       728   +4.25   724.5  729.8    2370
NYMEX CRUDE       FEB9     45.84   +0.51   45.22  45.91   28042

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.1360)
(US$1 = 69.9160 Indian rupees)
(US$1 = 6.8755 Chinese yuan)