KUALA LUMPUR (May 17): Malaysian palm oil futures recovered from a one-week low on Thursday and ended trading higher on the back of bargain-buying and a weaker ringgit, its currency of trade.
Gains in the Chicago Board of Trade soyoil also lent support to the market, said traders.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.8% at RM2,432 (US$613.06) a tonne at the close of trade. Earlier in the session, it hit the lowest since May 8 at RM2,399.
Trading volume stood at 45,537 lots of 25 tonnes each at the on Thursday evening.
"A weaker ringgit is seen supporting the market," said a Kuala Lumpur based trader, as a weaker ringgit typically makes palm oil cheaper for holders of foreign currencies.
The ringgit fell 0.1% on Thursday evening to 3.9670 per dollar. It has lost 0.5% since the start of the week.
Traders said the market rose earlier on bargain hunting gains in US soyoil but lacked bullish news for long-term support.
"We're seeing some bargain-hunting, but it seems like the market has no supportive news to push it higher," said a futures trader in Kuala Lumpur.
Demand for Malaysian palm oil has waned in recent weeks, according to export data from industry players.
Exports in the first half of May fell 13.7%-14.9% from a month earlier, showed data from inspection company AmSpec Agri Malaysia and cargo surveyor Societe Generale de Surveillance.
The demand slowdown could be attributed to Malaysia's resumption of a crude palm oil export tax, which was set at 5% for May following four months of suspension, said traders.
In related oils, the Chicago July soybean oil contract was up 0.5% on Thursday.
Palm oil is impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.
Palm, soy and crude oil prices, as of 1221 GMT
|MY PALM OIL||JUN8||2420||+16.00||2391||2422||2647|
|MY PALM OIL||JUL8||2427||+17.00||2394||2429||9198|
|MY PALM OIL||AUG8||2432||+18.00||2399||2435||17793|
|CHINA PALM OLEIN||SEP8||0||+0.00||0||0||0|
|CBOT SOY OIL||JUL8||30.74||+0.15||30.6||30.85||8142|
|INDIA PALM OIL||MAY8||650.00||+0.60||646.00||651.7||588|
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 = RM3.9670)
(US$1 = 67.7300 Indian rupees)
(US$1 = 6.3664 Chinese yuan)