KUALA LUMPUR (Aug 2): Malaysian palm oil futures rose to their highest level in three weeks in early trade on Thursday, in line for a fourth straight day of gains, supported by a weaker ringgit and a revision of biodiesel rules in Indonesia.
A weaker ringgit usually supports palm by making it cheaper for holders of foreign currencies. The ringgit, palm's currency of trade, weakened 0.2% to 4.0700 against the dollar on Thursday morning to trade at its lowest since the start of the year.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was up 0.4 percent at RM2,221 (US$545.70) a tonne at the midday break.
It earlier climbed as much as 0.9% to RM2,233, its highest levels since July 11.
Trading volume stood at 20,244 lots of 25 tonnes each at noon.
Indonesia on Wednesday evening said it aims to make the use of biodiesel compulsory for all vehicles and heavy machinery from Sept 1, to cut down on diesel imports and reduce the country's current account deficit.
"The biodiesel announcement did provide strength for the market... And the ringgit is back to 4.0700 (against the dollar)," said a Kuala Lumpur-based trader, as palm oil is used as a feedstock to make the biocomponent in biodiesel.
A recovery in US soyoil and crude oil prices also supported palm, the trader added.
The Chicago December soybean oil contract had declined 1.2% on Wednesday, but was last up 0.4%.
Meanwhile, the September soybean oil contract on China's Dalian Commodity Exchange rose 0.2% and the Dalian September palm oil contract gained 0.7%.
Palm oil prices are influenced by the performance of other edible oils as they compete for a share in the global vegetable oils market.
Palm, soy and crude oil prices at 0458 GMT
|MY PALM OIL||AUG8||0||+0.00||0||0||0|
|MY PALM OIL||SEP8||2199||+9.00||2193||2211||841|
|MY PALM OIL||OCT8||2221||+9.00||2211||2233||8918|
|CHINA PALM OLEIN||JAN9||4924||+64.00||4874||4938||260692|
|CBOT SOY OIL||DEC8||29.05||+0.00||28.96||29.1||3024|
|INDIA PALM OIL||AUG8||597.10||-0.20||596.70||598.3||119|
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US 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 US dollars per barrel
(US$1 = RM4.0700)
(US$1 = 68.3925 Indian rupees)
(US$1 = 6.8171 Chinese yuan)