Palm rallies nearly 5% to highest in almost seven weeks

Malaysian palm oil futures jumped nearly 5% on Tuesday, hitting their highest in nearly seven weeks, helped by a continuous decline in the ringgit and concerns over global edible oil supply.

The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange gained 183 ringgit, or 4.7%, to 4,070 ringgit ($863.94) a tonne by the midday break. The contract was also up for a third consecutive session and touched its highest since Sept. 1.

A weaker ringgit added with fears of floods hitting production in Malaysia are keeping prices elevated, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

“There are also worries that escalating Russia-Ukraine tensions may limit sunflower oil shipments from Ukrainian ports, which may channel demand to alternatives including palm oil,” he added.

The ringgit, palm’s currency of trade fell 0.08% against the dollar to its lowest since 1998, making the commodity cheaper for holders of foreign currency.

Dalian’s most-active soyoil contract gained 0.7%, while its palm oil contract gained 3.1%. Soyoil prices on the Chicago Board of Trade were up 0.3%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may break a resistance at 3,924 ringgit per tonne and rise into 3,958-4,001-ringgit range, Reuters technical analyst Wang Tao said. ($1 = 4.7110 ringgit)