business
Palm oil erases gains, chasing weak soyoil
The vegetable oil market is receiving support from attempts by leading producers to raise the amount of palm oil used in biodiesel. – The Malaysian Insider file pic, March 8, 2016.Malaysian palm oil futures eased on Tuesday, following losses in soyoil, though the downside was restricted by a drop in the ringgit and hopes that top-producing countries will now use more tropical oil for biodiesel production.
The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange closed down 0.35% at RM2,529 a tonne, having risen by 1.2% on Monday.
Earlier in Tuesday's trading palm touched RM2,551, its highest since February 29.
In competing vegetable oil markets, the May soybean oil contract on the Dalian Commodity Exchange was little changed while the Chicago soyoil contract fell by 0.5%.
"The ringgit has started falling again. It should limit the losses in palm oil," the trader said.
The ringgit lost 0.74% against the dollar, making the tropical oil, which is priced in the ringgit, cheaper for holders of other currencies.
The market is also receiving support from attempts by leading producers to raise the amount of palm oil used in biodiesel, traders said.
"It seems Malaysia and Indonesia are determined to increase palm oil blending in biodiesel. It will help in bringing down inventory in coming months," one Kuala Lumpur-based trader said.
Malaysia was confident that it would implement its programme for biodiesel to have a bio-content of at least 10%, Plantations Minister Douglas Uggah Embas said at a palm oil conference in Kuala Lumpur.
Traded volume stood at 20,334 lots of 25 tonnes each, significantly below the 42,774 lots traded on Friday.
"Before taking large position, traders want to know what industry officials say at the palm oil conference," said a Mumbai-based trader, referring to the conference in Kuala Lumpur from March 7-9.
Palm oil is expected to test resistance at RM2,559 a tonne, a break above which could open the way to the next resistance at RM2,580, said Wang Tao, Reuters market analyst for commodities and energy technicals. – Reuters, March 8, 2016.
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