Palm Futures Climb on Short-Covering

MALAYSIAN crude palm oil futures closed more than 1 per cent higher yesterday on short-covering ahead of the Muslim festive season, but a firmer ringgit capped gains, a trader said. Muslims worldwide will mark the end next week of the month-long Ramadan fasting period, when plantation workers in top palm oil producers, Indonesia and Malaysia, usually go on long holidays, triggering worries of tight supplies. “There is some technical rebound in anticipation of a long holiday next week, and the delay of Malaysian Palm Oil Board data is not good news for the market too,” said a trader in Kuala Lumpur, referring to monthly palm oil figures released by the industry regulator.

The Malaysian Palm Oil Board yesterday said August’s palm oil production, stocks, exports and imports data will be released on September 15. Investors are also on the watching for export data for the first 10 days of August after a lacklustre showing in July. The benchmark November crude palm oil contract on the Bursa Malaysia Derivatives Exchange climbed RM28 to RM2,570
per tonne. Overall traded volume was 10,997 lots of 25 tonnes each, slightly above the usual 10,000 tonnes. The Malaysian ringgit gained a quarter of a per cent to a 13-year high of 3.1190 per dollar. A stronger Malaysian currency erodes palm oil refiners’ margins as they buy the vegetable oil in ringgit and sell the refined and processed products in dollars. “If the ringgit strengthens further, refineries’ margins are going to be negative from next month onwards,” said a trader in Kuala Lumpur. Oil eased in Asian hours as the market joined in the wait for monthly data from leading energy consumer the United States, while Hurricane Earl posed a potential threat to the nation’s east coast refineries. However, other vegetable oil markets were up in Asian hours. US October soyoil rose half a per cent, and most active May soyoil on China’s Dalian commodity gained 1.4 per cent. Source : Business Times
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