JAKARTA: Malaysian palm oil futures rose on Thursday to snap a three-session losing streak, tracking gains in other vegetable oils and as expectations of lower output in the coming weeks boosted sentiment.
The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange ended 1.4 percent higher at 2,363 ringgit ($559) per tonne at the close. Traded volume stood at 41,019 lots of 25 tonnes each.
"The ringgit is weaker compared to yesterday," said a trader based in Kuala Lumpur. "There are some concerns about the weather... But the bottom line is that demand is quite bad."
A weaker ringgit normally boosts demand for palm as it makes the edible oil cheaper for holders of foreign currencies.
Palm oil prices hit a three-week high this week at 2,375 ringgit, on expectations that the monsoon season in dominant Southeast Asian producers will hurt output in the coming months.
Palm oil shipments in November dropped 10 percent from a month earlier, cargo surveyor data released on Monday showed.
Traders are wary of high stock levels for the tropical oil, with demand currently weak and failing to make a serious dent to inventory levels.
Malaysia's palm oil stocks rose to a near 15-year high at the end of October, while inventories jumped 7.3 percent to 2.83 million tonnes, according to the latest data.
"The high stockpiles will continue to put a lid on CPO prices in the
near-term," Ivy Ng, an analyst with CIMB Research, said in a note. "We project
near-term CPO price to trade in the range of RM2,100-2,500 per tonne."
"CPO prices will only start to move higher when there are signs of depleting
palm inventories at the palm producing countries in 1Q16."
On Wednesday, palm touched its lowest level since Nov. 26 at 2,317 ringgit.
In competing vegetable oil markets, the U.S. December soyoil contract
fell 0.6 percent, while the May soybean oil contract on the Dalian
Commodity Exchange was little-changed. On Wednesday, Chicago soybean futures
rose to a five-week high.
"We are tracking what happened with soybeans," said a second palm oil
trader, referring to Wednesday's trading.
In related markets, crude oil prices rose from near-2015 lows after a report
sourced to a senior OPEC delegate said Saudi Arabia would propose a deal to
balance oil markets with non-OPEC help next year.
Palm, soy and crude oil prices at 1009 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC5 2190 +50.00 2180 2191 62
MY PALM OIL JAN6 2286 +30.00 2259 2290 2569
MY PALM OIL FEB6 2363 +32.00 2334 2365 24726
CHINA PALM OLEIN MAY6 4636 -32.00 4602 4704 1105406
CHINA SOYOIL MAY6 5680 -8.00 5626 5738 1040224
CBOT SOY OIL JAN6 30.61 +4.00 30.29 30.66 10881
INDIA PALM OIL DEC5 401.80 +4.00 399.50 402.40 1194
INDIA SOYOIL DEC5 626.70 +3.00 624.50 627.40 11505
NYMEX CRUDE JAN6 40.46 +0.52 40.07 40.65 48921
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 = 4.2250 ringgit)
($1 = 66.7300 Indian rupees)
($1 = 6.3972 Chinese yuan renminbi)
- Reuters
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