Palm Oil Climbs to Near 2-week High
KUALA LUMPUR: Malaysian palm oil futures rose to their highest in nearly two-weeks yesterday after the ringgit currency plunged to a five-year low, making palm cheaper for overseas buyers, although the rout in crude could cap the rally.
Malaysia’s ringgit slid to its lowest since Sept 2009 yesterday, dropping as much as 0.9% to 3.5030 per dollar on worries that lower crude prices would hurt the Southeast Asian country’s fiscal deficit.
“The ringgit depreciation will likely negate weakness in crude oil futures and boost buying interest in the Bursa Malaysia Derivatives exchange today,” said Lingam Supramaniam, director at Malaysian-based commodities firm Pelindung Bestari.
He added that a break above 2,200 ringgit could drive benchmark prices to RM2,213-2,217, and any selling will likely find a support at RM2,159-2,164 levels.
By the midday break, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had inched up 1.3% to RM2,200 (US$628) per tonne, with prices earlier touching RM2,204, their highest since Nov 27.
Total traded volume stood at 14,160 lots of 25 tonnes, above the usual 12,500 lots.
But palm’s rise could be limited as crude prices took another beating on oversupply woes. Cheaper crude dents palm’s demand as a biofuel feedstock.
Oil prices fell more than a dollar at one stage on Monday after Morgan Stanley cut its forecast for Brent crude, approaching a five-year low hit early this month, and the market got little support from mixed Chinese trade data.
On the domestic front, the Malaysian Palm Oil Association, a group of growers, estimates that November crude palm oil production in the No. 2 producer fell 5.8% from a month ago to around 1.78 million tonnes.
The expected fall in output is slightly more than a Reuters poll of industry players and planters that pegged output to drop 4.9% to 1.8 million tonnes. The poll also sees Malaysian end-stocks at a 21-month high of 2.29 million tonnes.
Official data for Malaysia’s November inventories, production and exports will be released by industry regulator the Malaysian Palm Oil Board tomorrow. – Reuters
Source : TheSunDaily