Malaysian palm oil price reverses gains from near 3-week high on slow demand, stronger ringgit

  • Business
  • Thursday, 10 Mar 2016

Malaysian palm oil futures ended lower on Thursday and snapped two sessions of gains after hitting a 20-month high earlier in the session, on the back of a stronger ringgit and weaker export demand

KUALA LUMPUR: Malaysian palm oil futures reversed gains to fall from a near three-week high on Thursday evening, due to sluggish export demand and a stronger ringgit.

    The ringgit gained 0.8 percent in evening trade to touch 4.0900 against the dollar. Palm oil becomes more expensive for holders of foreign currencies on a stronger ringgit, the currency palm oil is traded in.
    The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange lost 0.4 percent to 2,548 ringgit ($623) per tonne at the end of the trading day, after earlier reaching an intra-day high of 2,577 ringgit.
    Traded volume stood at 45,453 lots of 25 tonnes each on Thursday.
    The market had earlier rallied as leading analysts at a Kuala Lumpur conference forecast lower output due to the crop-damaging El Nino phenomenon.
    February output from Malaysia, the world's second largest
producer of palm oil, fell to a nine-year low of 1.04 million
tonnes, declining 7.7 percent from a month ago, data from the
Malaysian Palm Oil Board (MPOB) showed on Thursday. 
    "February's end-stocks were within trade expectations,
demand has yet to improve," said a trader from a brokerage firm
in Kuala Lumpur. 
    There was a rise in exports for the first 10 days of March,
but it is against a low base during the same period in February
due to the Lunar New Year celebrations, said the trader, adding
that the stronger ringgit led to some speculative selling in the
    Export data from two cargo surveyors showed shipments rising
to 327,551 tonnes in the first 10 days of March.
    "Cargo surveyor export data is not exciting... At this rate,
for the full month of March we will reach 1 million tonnes
only," said another trader.
    The El Nino brings scorching heat across Southeast Asia,
reducing palm yields and lowering output in top producers
Indonesia and Malaysia. Industry experts at the Kuala Lumpur
conference see the weather phenomenon lifting palm's benchmark
prices to 2,700-3,000 ringgit a tonne.
    In competing vegetable oil markets, the May soybean oil
contract on the Dalian Commodity Exchange rose 0.3
percent, while the Chicago soyoil contract was slightly
up by 0.03 percent.
  Palm, soy and crude oil prices at 1019 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAR6    2489   -29.00    2485    2507      64
  MY PALM OIL      APR6    2527   -17.00    2524    2559    1819
  MY PALM OIL      MAY6    2548    -9.00    2540    2577   22516
  CHINA PALM OLEIN MAY6    5070   -12.00    5062    5192  878500
  CHINA SOYOIL     MAY6    5696   +14.00    5690    5756  386412
  CBOT SOY OIL     MAY6   31.59    -9.80   31.53   31.79    4802
  INDIA PALM OIL   MAR6  497.70    -9.80  496.30  506.30    2774
  INDIA SOYOIL     MAR6  608.25    -4.25  608.10  612.00    8970
  NYMEX CRUDE      APR6   37.87    -0.42   37.84   38.34   55723
  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 = 4.0900 ringgit)
($1 = 67.0125 Indian rupees)
($1 = 6.5140 Chinese yuan)
- Reuters
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