Malaysian palm oil futures inched up for a second session on Wednesday, hovering at a near two-month high, as crude and rival soyoil prices rose but traders remained cautious ahead of May production data release.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange gained 9 ringgits, or 0.38 per cent, to 2,350 ringgits ($552.03) a tonne by the midday break.
The contract hit its highest level since April 9 in the previous session.
Uncertainties about May production in Malaysia kept traders cautious with many preferring to remain on the sidelines, said Paramalingam Supramaniam, director of Selangor-based brokerage Pelindung Bestari Sdn Bhd.
“Exports are better in June, with offtake mainly coming from India, but July demand is just lukewarm,” Paramalingam added.
Traders are expecting the Malaysian Palm Oil Association to release its estimates of May production this week.
European Union palm oil imports in the 2019/20 season were down 11 per cent at 5.25 million tonnes from the previous year.
Oil rose with Brent hitting $40 for the first time since March, as optimism mounted for major producers to extend output cuts and a demand-spurring recovery from the coronavirus outbreak. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract rose 0.85 per cent, while its palm oil contract jumped 1.88 per cent. Soyoil prices on the Chicago Board of Trade were also trading 0.25 per cent higher.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil looks neutral in a range of 2,298-2,345 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said.