Palm oil rebounds on weaker ringgit, short covering

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KUALA LUMPUR (Aug 14): Malaysian palm oil futures rebounded from losses earlier in the day to chart a first day of gains in four sessions, lifted by a weaker ringgit and some short covering, traders said.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange edged up 0.4% to 2,213 ringgit (US$540.42) a tonne at the close of trade.

Palm had declined to a one-week low in its previous session, when it recorded its sharpest daily decline in a month.  

Trading volumes stood at 43,246 lots of 25 tonnes each at the end of the trading day. 

"The ringgit's weakness along with short covering gave the market some support above 2,200 ringgit," said a Kuala Lumpur-based trader.

A weaker ringgit, palm's traded currency, usually makes the edible oil cheaper for holders of foreign currencies. The ringgit fell 0.1% against the dollar on Tuesday to its lowest levels since November 2017.

Palm oil prices were down earlier in the day on the back of weak demand, said traders, and also on concerns that a sharp drop in the Indian rupee would dampen exports.

India's palm oil imports slumped 33% in July from a year earlier to 550,180 tonnes, as higher duties and a depreciating rupee made imports more expensive, a leading trade body said on Tuesday.

India is the world's biggest importer of edible oils, and a depreciating local currency reduces its ability to buy palm oil.

The Indian rupee on Monday touched an all-time low of 69.62 per dollar in early trade, tracking other weaker emerging market currencies and on concerns of a spill-over from a crisis-hit Turkey.

It was last up 0.2% at 69.89 against the dollar by Tuesday evening. 

Malaysia's palm oil exports rose 6.8% in July from June to 1.21 million tonnes, according to industry regulator data.

In other related oils, the Chicago December soybean oil contract was down 0.6%, while the January soybean oil contract on China's Dalian Commodity Exchange gained 0.5%.

Meanwhile, the Dalian January palm oil contract edged up 0.5%.

Palm oil prices are affected by movements of other edible oils, as they compete for a share in the global vegetable oils market.
                
 Palm, soy and crude oil prices at 1127 GMT

Contract Month Last Change Low High Volume
MY PALM OIL AUG8 2140 +9.00 2140 2150 10
MY PALM OIL SEP8 2199 +9.00 2182 2201 1045
MY PALM OIL OCT8 2212 +9.00 2195 2217 16865
CHINA PALM OLEIN JAN9 4890 -26.00 4886 4932 227990
CHINA SOYOIL JAN9 5864 +30.00 5822 5882 317412
CBOT SOY OIL DEC8 28.51 +0.00 28.48 28.65 6416
INDIA PALM OIL AUG8 593.10 -2.80 592.20 596.7 467
INDIA SOYOIL AUG8 731 -2.80 726.5 734.2 4420
NYMEX CRUDE SEP8 68.00 +0.80 67.35 68.01 97322

 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 = 4.0950 ringgit)
(US$1 = 69.8200 Indian rupees)
(US$1 = 6.8819 Chinese yuan)