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Malaysian palm oil futures rose on Friday, notching a second consecutive weekly gain despite higher June stocks, as strength in competing vegetable oils and a weaker local currency (the ringgit) lent support.
The benchmark palm oil contract for September delivery on Bursa Malaysia Derivatives climbed 29 ringgit, or 0.7%, to close at 4,175 ringgit ($982.35) a tonne. The contract booked a weekly gain of 2.78%.
Anilkumar Bagani, head of commodity research at Sunvin Group in Mumbai, said:
"Malaysian crude palm oil futures opened sharply higher today, driven by a strong rally in refined, bleached and deodorised palm oil prices on China's Dalian exchange."
The most active soybean oil contract on the Dalian exchange rose 0.73%, while its palm oil contract gained 0.63%. By contrast, soybean oil prices on the Chicago Board of Trade (CBOT) fell 0.64%.
Palm oil is known to take direction from movements in competing vegetable oils, as it vies with them for a share of the global market.
Rising Stocks Weigh On Market, But Export Improvement Offers Support
Bagani added: "Thursday's data from the Malaysian Palm Oil Council leaned slightly bearish, but the market shrugged it off, as some shipments were deferred from June to July, which could boost palm oil exports in July."
Regulatory data showed that Malaysia's palm oil stocks rose 2.41% to 2.03 million tonnes by the end of June, the highest level in 18 months.
Meanwhile, data from cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia showed that exports of Malaysian palm oil products for 1-10 July rose between 5.3% and 12% compared with the previous month.
Global Oil Market And A Weaker Currency
Crude oil prices held steady on Friday despite concerns over a slowdown in global demand this year, according to the International Energy Agency (IEA), alongside worries over potential US tariffs and additional sanctions on Russia.
Higher crude oil prices support demand for palm oil as a feedstock for biodiesel production, making it a more attractive option for fuel use.
The Malaysian ringgit, the currency used in palm oil trading, weakened 0.12% against the dollar, making the commodity cheaper for foreign buyers.
Technical Outlook
Reuters technical analyst Wang Tao said palm oil prices could break support at 4,134 ringgit a tonne and fall towards a range of 4,072 to 4,096 ringgit.
Source: Reuters