Vegoils: Palm oil sees strongest jump in 3 weeks tracking related oils

By Emily Chow

KUALA LUMPUR (Reuters) - Malaysian palm oil futures clocked their highest gains in three weeks in early trade on Monday, tracking an uptrend in crude oil prices and supported by soyoil on the U.S. Chicago Board of Trade.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange jumped 1.6 percent to 2,377 ringgit ($603.30) a tonne at the midday break, its biggest gain since April 17.

It earlier rose as much as 1.7 percent to 2,379 ringgit, its highest level since May 2.

Trading volume stood at 15,684 lots of 25 tonnes each.

 

"Palm market rose tracking crude oil's price movement, which went up a lot on Friday. On a favourable palm oil to gas oil spread, there is new buying for crude palm oil," said a Kuala Lumpur based trader.

"Gains in rival oilseed are also lending support."

Palm oil prices are impacted by movements of crude oil, as it is used as feedstock to make biodiesel. Rising oil prices in recent weeks have made biodiesel production more economical, as gas oil's price premium over palm last widened to $56 per tonne on Monday.

Brent crude oil futures rose above $70 a barrel on Monday for the first time since November 2014, on the back of a deepening economic crisis in major oil exporter Venezuela. [O/R]

In other related oils, gains in U.S. soyoil on the Chicago Board of Trade provided additional support to palm. The Chicago July soybean oil contract was last up 0.5 percent on Friday.

Palm oil is impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.

Meanwhile, the September soybean oil on China's Dalian Commodity Exchange rose 0.9 percent, while the Dalian September palm oil contract was up 0.8 percent.

Further movement in the palm market will depend on upcoming official data release by industry regulator the Malaysian Palm Oil Board.

Malaysian palm oil inventories at end-April are expected to fall 4.1 percent to 2.23 million tonnes, the lowest in six months, according to a Reuters poll of nine traders, planters and analysts.

Meanwhile, the survey respondents also forecast that April exports will fall 5.5 percent on-month to 1.48 million tonnes, but output will remain flat at 1.57 million tonnes.

Official data for the month of April is scheduled for release on Thursday, May 10 at around 0430 GMT.

(Reporting by Emily Chow; Editing by Sunil Nair)