Palm up on rising oil price, weather concerns

MALAYSIAN crude palm oil futures rose 1.2 per cent by midday today, boosted by rising oil prices and fears that rainy weather may cut output, traders said.

“From what everybody can see from the screen, it is crude oil that pushed the market higher. There is also talk about floods, and continued rains,” said a trader at a Kuala Lumpur-based brokerage.

Palm prices tend to track crude oil because of its use for biodiesel, which competes with fossil-based fuel.

The benchmark February contract on Bursa Malaysia Derivatives Exchange rose RM27 ringgit to RM2,369 (US$703.18) per tonne. Overall volume was 7,461 lots of 25 tonnes each.

Oil extended gains above US$79 a barrel on Wednesday, supported by an industry report that showed crude stocks in the U.S. fell steeply last week, but limited by U.S. economic data that painted a picture of a slow recovery.

“The market may continue to rise. I think RM2,400 will come,” the Kuala Lumpur-based brokerage trader said.

“I think the fundamentals are quite straight forward.

Exports are quite good and we have a little setback in production. So the market is well supported,” another Malaysian trader said. - Reuters