KUALA LUMPUR/JAKARTA: Malaysian palm oil futures edged up on Thursday, swelled by a jump in crude oil prices, while wet weather warnings across parts of the second-largest grower stoked concern that yields of the tropical oil will drop this month.
Malaysia's weather department issued an "orange" warning on
its website for heavy rain across the states of Sabah, Kelantan,
and Terengganu, expected to persist until the end of the week.
Rains are also expected across Pahang.
Sabah is Malaysia's top growing palm state, and together
with Pahang, accounts for about 45 percent of the country's
supply of crude palm oil.
Prolonged rains can cause flooding of palm estates,
complicating harvesting and transport of fresh fruit to mills.
A Malaysian palm oil trader with a foreign commodities
brokerage told Reuters palm prices are edging up on concerns
over the wet weather and floods in some areas, alongside hopes
of a recovery in crude oil prices.
Brent crude jumped 2 percent to above $62 a barrel on
Thursday, as some traders bet a six-month price rout could be
ending as more energy firms cut investment budgets.
The benchmark March contract on the Bursa Malaysia
Derivatives Exchange was up 0.8 percent at 2,147 ringgit ($621)
per tonne by Thursday's close. Total traded volume stood at
52,238 lots of 25 tonnes, above the average 35,000 lots.
Oil this week hit a five-year low of $58.50 a barrel as
fast-growing U.S. shale output overwhelmed demand, with losses
deepening after OPEC said it would not cut output.
The plunge in oil prices wiped out profitable margins to
blend palm oil into biodiesel, pressuring futures.
Some market players said the contract was also supported by
a technical rebound that kicked in after prices touched 2-week
lows of 2,103 ringgit in the previous session.
"The market has a trading range of 2,100 ringgit to about
2,200 ringgit. The last few days it came off quite a bit so
there is some technical rebound," said a second Kuala
Lumpur-based trader.
"You can see that as the market goes closer to 2,100 ringgit
there is a buying opportunity."
In competing vegetable oil markets, the most active May
soybean oil contract on the Dalian Commodity Exchange
shed 0.1 percent in late Asian trade, while the U.S. soyoil
contract for January 1.0 percent.
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 = 3.464 Malaysian ringgit)
($1 = 6.2163 Chinese yuan)
($1 = 63.18 Indian rupee)
- Reuters
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