Palm gains on firm Dalian; weak crude, high stocks limit upside

On Thursday, Malaysian palm oil futures surged for the second day in a row, bolstered by a stronger counterpart in Dalian, but their ascent was tempered by falling crude oil prices, higher inventory levels, and profit-taking. The January palm oil contract on Bursa Malaysia Derivatives Exchange climbed 26 ringgit, or 0.59%, to 4,436 ringgit ($1,089.93) per metric ton by midday.

The market surged after bullish rallies in Dalian and overnight Chicago soyoil futures reports, according to Anilkumar Bagani, head of research at Sunvin Group. Nevertheless, Bagani noted that falling energy prices and Malaysia's substantial inventories prompted profit-taking near a critical technical resistance level. Dalian's leading soyoil contract climbed 0.21%, while its palm oil contract jumped 1.44%.

Soyoil prices on the Chicago Board of Trade slipped 0.28%. Palm oil mirrors the price shifts of other edible oils as it fights for a piece of the global vegetable oil market. Oil prices plummeted over $1 per barrel due to eased worries over potential conflict in the Middle East, which lowered the risk premium in crude markets. Furthermore, higher OPEC+ production and increasing US inventories raised concerns about oversupply.

The weakening of the ringgit, palm oil's trading currency, made the commodity marginally cheaper for foreign buyers. Palm oil could test a resistance zone of 4,471 to 4,489 ringgit per metric ton, and a break above this could propel it into the 4,519-4,567 ringgit range, according to Reuters technical analyst Wang Tao.