Malaysian palm oil ticks up on crude oil strength, weaker ringgit


  • Plantations
  • Thursday, 02 Apr 2020

Palm oil temp check at mill

KUALA LUMPUR: Malaysian palm oil futures edged up on Thursday, as crude oil futures rallied and the ringgit weakened, but concerns over a drop in global demand limited gains.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was up 8 ringgit, or 0.34%, at 2,348 ringgit ($536.93) per tonne, as of 0239 GMT.(1039 Malaysian time)

Palm fell 2.6% in the previous session on deepening worries over a plunge in global demand as more countries are under shutdown orders to curb the spread of the coronavirus pandemic.

FUNDAMENTALS

* Crude oil futures jumped nearly 5% in early trading on Thursday after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal in the next few days to end their oil price war. Stronger crude oil futures make palm a more appealing option for biodiesel feedstock.

* The ringgit, palm's currency of trade, fell 0.7% against the dollar, making the edible oil cheaper for holders of foreign currency.

* China's ports and shipping firms are bracing for a deeper and more prolonged supply chain disruption in the world's second-largest palm buyer as the global spread of the virus chokes international demand.

* Dalian's most-active soyoil contract and its palm oil contract both slipped 0.6%. Soyoil prices on the Chicago Board of Trade firmed 0.5%.

* Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

* Palm oil is biased to break a support at 2,327 ringgit per tonne, and fall towards 2,253 ringgit, Reuters technical analyst Wang Tao said.

MARKET NEWS

* Asian equities fell for a second session on Thursday, after a dire warning about the U.S. coronavirus death toll had investors looking to the safety of dollars and bonds and bracing for more bad news from U.S. jobless figures. - Reuters
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