Malaysian Palm Oil Ends at 2-week High on Stronger US Soyoil

KUALA LUMPUR: Malaysian palm oil futures ended higher on Tuesday, as stronger soy markets helped palm recover from early losses, although gains were still capped by worries of lacklustre demand for the tropical oil.   

The US soyoil contract for March rose 1.5% in late Asian trade, lifting benchmark palm oil values to their fourth straight day of gains. 

“The U.S. soyoil market is leading the way,” said a trader with a foreign commodities brokerage in Malaysia. 

Palm typically tracks soy oil, a competing edible oil. Traders said a weak Malaysian ringgit also stoke demand from overseas buyers and refiners, supporting prices.    

The benchmark April contract on the Bursa Malaysia Derivatives Exchange settled 0.4% higher at RM2,588 (US$780) per tonne. During the session, April palm oil advanced one tick higher to RM2,589, its highest since Jan 7.

Total traded volume stood at 41,261 lots of 25 tonnes, much higher than the usual 35,000 lots.   

But sluggish food and fuel demand for the tropical oil capped the rise. Weak exports could add to Malaysia’s inventories, which hit a nine-month high of 1.99 million tonnes at end-December. 

Cargo surveyors on Monday reported that exports of Malaysian palm oil products fell between 15% and 16% in the Jan 1-20 period from a month ago, as demand by the world’s biggest palm oil buyer India slackened.    

“Exports are not so good. The demand is not picking up. Surprisingly China is not buying a lot, but maybe they will replenish their stocks later on,” another trader with a foreign commodities brokerage in Kuala Lumpur said. 

Indonesia, the world’s top palm oil producer, on Tuesday cut its export tax for crude palm oil to 10.5% for February, down from 12% in the previous month. 

Malaysia earlier said it will maintain its own duties for the crude grade at 5%. 

In other markets, oil rose above US$107 a barrel on Tuesday as the International Energy Agency raised its forecast for global oil demand this year, citing accelerating economic growth that would outstrip supply. 

In other competing vegetable oil markets, the most active May soybean oil contract on the Dalian Commodities Exchange was flat in late Asian trade. 

Palm, soy and crude oil prices at 1025 GMT  

Contract

Month

Last

Change

Low

High

Volume

MY PALM OIL

FEB4

2571

+11.00

2542

2571

970

MY PALM OIL

MAR4

2578

+10.00

2547

2580

4885

MY PALM OIL

APR4

2588

+9.00

2556

2589

17380

CHINA PALM OLEIN

MAY4

5888

+4.00

5876

5936

387396

CHINA SOYOIL

MAY4

6666

-2.00

6662

6708

351098

CBOT SOY OIL

MAR4

38.32

+0.58

37.93

38.45

15059

NYMEX CRUDE

FEB4

94.42

+0.05

93.43

94.50

6104

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. Crude in US dollars per barrel (US$1=3.31 Malaysian ringgit) – Reuters.

Source : The Star

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