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Palm settles higher despite profit-taking, premium worries

Malaysian palm oil futures edged higher on Wednesday for a second straight session, despite profit-taking pressure and concerns that a widening premium over rival oils could dampen demand.

The benchmark palm oil contract FCPOc3 for January delivery on the Bursa Malaysia Derivatives Exchange gained 58 ringgit, or 1.25%, to 4,695 ringgit ($1,073.14) a metric ton at the close.

The contract has risen 3.67% over two consecutive sessions. The market will be closed on Thursday for a holiday.

Crude palm oil futures prices demonstrated resilience in the previous session but a slight retracement is expected due to profit taking activities, said Darren Lim, a commodities strategist with Singapore-based brokerage firm Philip Nova.

“Optimism about an uptick in Chinese demand following details of a potential fresh stimulus package had supported speculative buying above the 4,600 ringgit level.

“Traders will also be closely monitoring developments in related vegetable oils, as the widening premium will ultimately reduce demand for palm compared to its substitutes, keeping gains capped,” Lim added.

Dalian’s most-active soyoil contract DBYcv1 rose 0.5%, while its palm oil contract DCPcv1 added 1.29%. Soyoil prices on the Chicago Board of Trade BOcv1 were up 0.82%.

Palm oil tracks price movements of rival edible oils, as they compete for a share in the global vegetable oils market.

The ringgit MYR=, palm’s currency of trade, slipped 0.09% against the dollar, making the commodity cheaper for buyers holding foreign currencies.

Oil prices held steady near one-month lows, after sliding in the previous two sessions, as markets weighed a potential ceasefire between Israel and Hezbollah and rising OPEC+ crude supplies against a possible drop in U.S. fuel stocks and demand concerns.

Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.

European Union soybean imports so far in the 2024/25 season that started in July had reached 3.78 million metric tons by Oct. 25, up 1% from a year earlier, while palm oil imports were down 21% to 988,458 tons, data published by the European Commission showed.
Source: Reuters (Reporting by Ashley Tang; Editing by Subhranshu Sahu and Mrigank Dhaniwala; Editing by Emelia Sithole-Matarise)

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