KUALA LUMPUR: Malaysian palm oil futures climbed to a one-week top in early trade on Wednesday, in line to chart a third consecutive day of gain, as it tracked an increase in U.S. soyoil on the Chicago Board of Trade (CBOT) and a weaker ringgit.
The ringgit, palm's currency of trade, on Wednesday, eased to its weakest levels against the dollar since end-December. It was last down 0.1% to 4.1720. A weaker ringgit supports palm oil by making it cheaper for foreign buyers.
Benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 1.4% at 2,043 ringgit ($489.69) a tonne at the midday break on Wednesday, its strongest levels since May 8.
"The market is tracking the overnight recovery in CBOT and further weakness in the ringgit today extended the technical pullback," said a Kuala Lumpur-based futures trader.
"Expectations of higher exports and negative growth for production also added strength to the market."
Malaysian palm oil shipments rose for May 1-15, up 14.4% from the corresponding period last month, data from cargo surveyor Amspec Agri Malaysia showed.
Palm oil output in May is also expected to see declines or smaller monthly growth from April. Data from the Malaysian Palm Oil Board last Friday showed April output fell 1.4% from the previous month to 1.65 million tonnes. However, it is the highest for the month since 2015.
Palm oil may test a resistance at 2,034 ringgit per tonne, following its second failure to break a support range of 1,940-1,967 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related oils, the Chicago July soybean oil contract had gained 1.5% on Tuesday, in line with soybean's gains as planting delays in the Midwest crop belt sparked a round of short-covering.
It was last up 0.2%. Meanwhile, the July soyoil contract on the Dalian Commodity Exchange was down 1.1%, and the Dalian June palm oil contract dropped 2.9%.
Palm oil prices are affected by movements in soyoil, with which it competes for global market share. - Reuters