KUALA LUMPUR: Malaysian palm oil futures rose to their highest in nearly a week on Monday after the ringgit dropped in late trade, but weak U.S. and Chinese soy markets capped gains and locked prices in a tight range.
By the close, the benchmark December contract had inched up 0.4
percent to 2,325 ringgit ($713) per tonne on the Bursa Malaysia Derivatives
Exchange. Prices reached as high as 2,327 ringgit, the highest since Sept. 24.
In the morning session, the contract had fallen as low as 2,296 ringgit but
turned up after Asian currencies fell on investor uncertainty about a U.S.
government shutdown and on disappointing Chinese factory activity data.
A weaker local currency makes palm oil cheaper for overseas buyers and helps
stoke demand.
But weak prices for soyoil, which could channel some food and fuel demand
away from palm oil, put a lid on gains and prevented prices from rallying.
The U.S. soyoil contract for December fell 0.1 percent in late Asian
trade, while the most-active January soybean oil contract on the Dalian
Commodities Exchange eased 0.7 percent.
"The negative factor is weak global commodity prices like soybean, soybean
oil and crude oil," said a Kuala Lumpur-based trader at a foreign commodities
brokerage.
"At the same time, there is weakness in the Malaysian ringgit, so the market
is moving in a tight range."
The Malaysian ringgit and the Indonesian rupiah took the
hardest hits. The ringgit slipped 1.03 percent to 3.2620 against the U.S. dollar
late on Monday, while the rupiah's indicative prices fell to as low as 11,600,
according to Thomson Reuters data.
Total traded volumes in the December palm oil contract amounted to 29,246
lots of 25 tonnes each, slightly below the average 35,000 lots.
On the technical front, Malaysian palm oil is likely to
consolidate in a range of 2,270 to 2,311 ringgit per tonne before either
rebounding further or continuing to slide, said Reuters market analyst Wang Tao.
Palm also drew support from export demand. Shipments of Malaysian palm oil
grew 2.1 percent in September compared with a month ago, cargo surveyor Intertek
Testing Services said. Another cargo surveyor showed exports rose 1.0 percent
for the same period.
But investor fears over seasonally rising output in Southeast Asia and
predictions that prices could hit fresh lows in the coming months dragged them
down 3.3 percent for the month of September.
Forecasts of near-record U.S. harvests also piled pressure on Chicago
soybeans, which hovered near one-month lows on Monday.
Larger supplies of soybeans for crushing into soyoil could
snatch demand away from palm oil.
In other markets, Brent crude fell more than $1 to below $108 a
barrel and was headed for its first monthly decline since May, as tensions over
Iran eased and a potential U.S. government shutdown clouded the outlook for
demand.
Palm oil is often used as a green alternative to crude oil for producing
biofuels.
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2355 +5.00 2335 2355 170
MY PALM OIL NOV3 2315 +1.00 2300 2325 4704
MY PALM OIL DEC3 2325 +10.00 2296 2327 14873
CHINA PALM OLEIN JAN4 5384 -2.00 5370 5418 230740
CHINA SOYOIL JAN4 6960 -52.00 6934 7008 359152
CBOT SOY OIL DEC3 41.74 -0.07 41.51 41.80 7665
NYMEX CRUDE NOV3 101.43 -1.44 101.36 102.54 28038
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.26 Malaysian ringgit)
- Reuters
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