Malaysian palm oil price at 2-week high on weaker ringgit

Palm oil may break a support at 2,546 ringgit per tonne and fall more into a range of 2,505-2,530 ringgit, according to technical analysis by Wang Tao, a Reuters market analyst for commodities and energy technicals.

KUALA LUMPUR: Malaysian benchmark palm oil futures rose for a second consecutive day as the ringgit  weakened and stockpiles declined in the world's second largest palm producer. 

    The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was 0.2 percent higher at 2,668 ringgit ($658) per tonne at the midday break.

    It reached an intraday high of 2,689 ringgit, its strongest since April 25. Traded volumes were 47,944 lots of 25 tonnes each in the evening, versus a 2015 daily average of 44,600.

    "The ringgit was weaker and end-stocks fell," said a trader from Kuala Lumpur, referring to April inventories as shown by government data from the Malaysian Palm Oil Board (MPOB).

    The data, which was released at the market break at noon, showed a 4.5 percent decline in local stockpiles in April as output growth was less than expected. Production rose 6.7 percent from March to 1.30 million tonnes, compared with a 13.2 percent jump to 1.69 million tonnes in April last year.


    A Reuters poll had forecast Malaysian stockpiles would decline amid slumping production versus a year ago. 

    Palm was also supported by a weaker ringgit, which fell 1.1 percent to 4.0530 against the dollar in trade on Tuesday evening. A weaker ringgit, the currency palm oil is traded in, makes the commodity cheaper for holders of foreign currencies. 

    In competing vegetable oils, the September soybean oil contract on the Dalian Commodity Exchange rose 0.4 percent, while the Chicago Board of Trade soyoil contract for July dropped 0.2 percent.

    The offer price for crude palm kernel oil stood at 4,894.24 ringgit per tonne in the evening, according to price assessments by Thomson Reuters.

- Reuters
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