KUALA LUMPUR (May 4): Malaysian palm oil futures clocked their strongest gain in two weeks in early trade on Friday, on expectations of falling inventories, after a sharp decline on Thursday evening and being largely range-bound this week.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was up 0.2% at 2,337 ringgit (US$594.35) a tonne at midday break, its biggest gain since April 20. It earlier fell to a low of 2,324 ringgit, its weakest level since August 2016.
The market, however, fell 1.8% for the week so far, in line for a second consecutive weekly decline.
Trading volume stood at 17,156 lots of 25 tonnes each at midday break.
"The market is up on expectations that end-stocks will drop," said a futures trader in Singapore. "Consumption could also be supported due to Ramadan," he said, referring to the Muslim fasting month, which begins in mid-May this year.
Ramadan typically leads to higher usage of palm oil for cooking in Muslim majority regions, which sees devotees break day-long fasts with communal feasting.
Malaysian palm oil inventories at end-April are expected to fall 4.1% to 2.23 million tonnes, its lowest in six months, according to a Reuters poll of nine traders, planters and analysts.
Meanwhile, the survey respondents also forecast that April exports will fall 5.5% on-month to 1.48 million tonnes, but output will remain flat at 1.57 million tonnes.
Official data for the month of April is scheduled for release by industry regulator the Malaysian Palm Oil Board on May 10 at around 0430 GMT.
Another trader added that overnight gains in U.S. soyoil on the Chicago Board of Trade provided additional support to palm.
The Chicago July soybean oil contract rose as much as 0.7% on Thursday, but was last down 0.4% on Friday.
In other related oils, the September soybean oil on China's Dalian Commodity Exchange fell 0.3%, while the Dalian September palm oil contract declined 0.8%.
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 0500 GMT
|MY PALM OIL||MAY8||0||+0.00||0||0||0|
|MY PALM OIL||JUN8||2334||+5.00||2322||2338||1029|
|MY PALM OIL||JUL8||2337||+5.00||2324||2342||7795|
|CHINA PALM OLEIN||SEP8||4946||-40.00||4930||4958||272680|
|CBOT SOY OIL||JUL8||30.7||+0.00||30.66||30.75||2587|
|INDIA PALM OIL||MAY8||635.90||+2.80||633.00||636||162|
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. 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 U.S. dollars per barrel
(US$1 = 3.9320 ringgit)
(US$1 = 66.6800 Indian rupees)
(US$1 = 6.3452 Chinese yuan)