Malaysian palm oil futures climbed for a second session on Tuesday, as firmer rival edible oils and fears over potential El Nino-related production disruptions underpinned the market.
The benchmark palm oil contract (FCPOc3) for September delivery on the Bursa Malaysia Derivatives Exchange gained 21 ringgit, or 0.46%, to 4,571 ringgit ($1,122.54) a metric ton by the midday break.
The market traded higher amid stronger soybean oil and Dalian palm olein prices that lifted market sentiment, said David Ng, a proprietary trader at Kuala Lumpur-based trading firm Iceberg X Sdn Bhd.
Ng added that concerns over El Nino weather risks in the coming months, which may disrupt production patterns in the country, further supported the market.
Dalian's most-active soyoil contract (DBYcv1) rose 1.24%, while its palm oil contract CME:CPO1! added 1.27%. Soyoil prices on the Chicago Board of Trade (BOcv1) were up 0.05%.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Oil prices edged higher, though gains were capped as traders looked beyond easing geopolitical tensions in the Middle East and turned their attention to supply increases and demand prospects. O/R
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
The ringgit FX_IDC:USDMYR, palm's currency of trade, strengthened 0.22% against the dollar, making the commodity slightly more expensive for buyers holding foreign currencies.
Indonesian state planter PT Agrinas Palma Nusantara plans to open biodiesel and bioethanol plants to support the government's renewable energy agenda, while adding soybean and cassava to its portfolio, its chief executive said on Monday.
Palm oil may extend gains to 4,633 ringgit per metric ton, as a three-wave cycle from 4,710 ringgit has completed, Reuters technical analyst Wang Tao said. TECH/C
($1 = 4.0720 ringgit)