KUALA LUMPUR: Malaysian palm oil futures rose to their highest in over five weeks on Thursday as the Malaysian currency slipped to its lowest since early May and stoked buying interest, although some profit-taking in late trade eroded gains.
The Malaysian ringgit fell to a four-month low
ahead of the central bank's monetary policy decision, weakening
0.8 percent to 3.2425 against the greenback, and making palm oil
cheaper for overseas buyers and refiners.
Bank Negara Malaysia said late Thursday it will keep the
country's key interest rate unchanged at 3.25 percent.
However, mild profit-taking in afternoon trade eroded some
of the gains, traders said. But hopes that the weaker currency
will stoke demand for the ringgit-priced feedstock prevented
steeper losses.
Most Asian currencies have fallen this month on worries that
the U.S. Federal Reserve will take a more hawkish stance and
raise interest rates faster that earlier anticipated.
"Near term, the U.S. may raise interest rates, and this will
be a bonus for the U.S. dollar," said a trader with a foreign
commodities brokerage in Kuala Lumpur.
"At the same time, the Malaysian central bank might maintain
the overnight policy rate. This will weaken the ringgit, which
is positive for palm oil," the trader added.
The benchmark December contract on the Bursa
Malaysia Derivatives Exchange closed 0.1 percent higher at 2,145
ringgit ($664) per tonne. Prices earlier rose to 2,173 ringgit
the highest level since Aug. 13.
Total traded volume stood at 74,838 lots of 25 tonnes, more
than double the usual 35,000 lots.
Technicals showed that palm oil is expected to climb to
2,213 ringgit per tonne as it has broken resistance at 2,142
ringgit, said Reuters market analyst Wang Tao.
Expectations that the robust export demand seen in the first
half of September will hold into next month also provided
support to palm, traders said.
Exports of Malaysian palm between Sept. 1 and Sept. 15
jumped about 180,000 tonnes compared with a month ago, with
demand for crude palm oil surging.
The tropical oil has pulled up more than 200 ringgit after
plunging to a five-and-a-half-year low of 1,914 ringgit on Sept.
2, and is now on track for its biggest monthly gain since
October 2013 with an 11 percent rise so far in September.
But gains in palm oil will also narrow its discount to
competing vegetable oils and potentially water down food and
fuel demand from key buyers such as China and India.
"The question is how much the market can pull up. It is
trying to hold and push higher, but there is strong resistance
at 2,200 ringgit for the benchmark December contract," the Kuala
Lumpur-based trader added.
In rival vegetable oil markets, the U.S. soyoil contract for
December edged down 0.4 percent in late Asian trade,
while the most active January soybean oil contract on
the Dalian Commodities Exchange rose 0.1 percent.
In other markets, oil traded lower below $99 a barrel on
Thursday, pressured by ample supply and concern over the
weakening of demand growth in major consumer nations, as well as
a rise in the U.S. dollar.
Palm, soy and crude oil prices at 1027 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT4 2170 +14.00 2160 2189 1159
MY PALM OIL NOV4 2143 +8.00 2133 2166 14320
MY PALM OIL DEC4 2141 -3.00 2136 2173 33390
CHINA PALM OLEIN JAN5 5278 +46.00 5250 5288 654990
CHINA SOYOIL JAN5 6060 +4.00 6054 6112 416232
CBOT SOY OIL DEC4 33.41 +0.00 33.35 33.75 6656
INDIA PALM OIL SEP4 463.90 +0.00 461.40 467.90 1308
INDIA SOYOIL SEP4 643.60 -1.35 643.60 646.00 1690
NYMEX CRUDE OCT4 94.23 -0.19 93.62 94.45 14150
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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.23 Malaysian ringgit)
($1 = 6.1406 Chinese yuan)
($1 = 60.92 Indian rupees)- Reuetrs
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