JAKARTA (Nov 19): Malaysian palm oil marked a third day of gains on Wednesday, supported a weakening ringgit and stable competing vegetable oil prices, traders said.
"The market is up on the back of stable beanoil, a firm Dalian and a weak Malaysian ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur. "The ringgit weakening to 3.35 has the potential to further encourage exports."
In competing vegetable oil markets, the U.S. soyoil contract for December edged down 0.31 percent in early Asian trade on Wednesday, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.27 percent.
Both contracts have been trading within relatively tight ranges
since early August.
Malaysia's ringgit eased 0.16 percent to 3.357 per dollar on Wednesday, its weakest level since May 2010. The ringgit has lost 6.5 percent against the dollar since the beginning of September, making palm oil more attractive to international buyers.
By the midday break, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had edged up 0.53 percent to 2,263 ringgit ($674.11) per tonne. The contract is up 2.7 percent for the week.
Total traded volume on Wednesday stood at 13,127 lots of 25 tonnes, just above the average 12,500 lots traded by midday.
Technicals showed palm oil is expected to rise to 2,288 ringgit per tonne as it has cleared resistance at 2,253 ringgit, said Reuters market analyst Wang Tao.
Despite the recent gains, palm oil needs to break past the 2,300 level to exit range trading, the trader said.
"Then the uptrend can resume. If it experiences resistance around here, we can expect it to retest the 2,200 level again."
There was some talk in the market about declining output, another trader told Reuters, stopping short of providing further details. "A few traders are expecting production to fall fast."
In other markets, Brent crude held steady below $79 a barrel on Wednesday as data showed Saudi Arabia increased crude exports in September despite signs of an oversupplied market and divisions between OPEC members seemed to grow ahead of a meeting next week.
Palm, soy and crude oil prices at 0529 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC4 2241 +11.00 2239 2241 49
MY PALM OIL JAN5 2256 +8.00 2237 2260 3097
MY PALM OIL FEB5 2263 +12.00 2240 2266 6688
CHINA PALM OLEIN MAY5 5350 +20.00 5318 5378 675242
CHINA SOYOIL MAY5 5872 +16.00 5840 5880 234744
CBOT SOY OIL DEC4 32.55 +0.60 32.40 32.59 1842
INDIA PALM OIL NOV4 447.90 +0.60 447.60 448.20 80
INDIA SOYOIL NOV4 572.00 -1.00 572.00 572.40 260
NYMEX CRUDE DEC4 74.09 -0.52 74.01 74.46 1906
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
(1 US dollar = 3.3570 Malaysian ringgit)
(1 US dollar = 6.1199 Chinese yuan)
(1 US dollar = 61.8300 Indian rupee)