Malaysian palm oil futures slipped on Wednesday as investors took profits after prices hit three-month highs in the previous session, but a weak ringgit and strong exports in the first half of June limited losses.
Prices on Tuesday rose to the highest since March 25 as demand for the tropical oil spiked ahead of Ramadan, a Muslim festival where communal feasting throughout the month typically drives up consumption.
Asian currencies remained subdued on Wednesday as investors awaited clarity on whether the US Federal Reserve signals its intention to trim its stimulus programme after a two-day meeting.
A weaker ringgit against the dollar makes feedstock cheaper for overseas buyers and lifts refiners’ margins.
“The market has gone into a consolidation process,” said a trader with a foreign commodities brokerage in Malaysia.
“But looking at the strong exports, it doesn’t look like the market will go down for the time being. If the exports continue to be so strong, and the ringgit so weak, it’s hard to see the market coming off,” the trader added.
By the mid-day break, the benchmark September contract on the Bursa Malaysia Derivatives Exchange had inched down 0.6 per cent to RM2,454 per tonne. Prices traded in a right range between RM2,449-RM2,465.
Total traded volumes was muted at 6,640 lots of 25 tonnes each, lower than the usual 12,500 lots for the morning session.
Exports of Malaysia’s palm oil products surged as much as 19 per cent in June 1-15 compared to the same period last month, lifting investor hopes that the 1.82 million tonne stockpile in the world’s second-largest producer will shrink further.
Traders will also be looking at cargo surveyor export data for the first twenty days of the month, due on Thursday, to gauge demand.
In other markets, Brent crude futures held above US$106 a barrel on Wednesday as investors looked to the Federal Reserve meeting for clues on the outlook for a US stimulus programme that has underpinned commodity prices.
In vegetable oil markets, US soyoil for July rose 0.5 per cent in early Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange edged down 0.6 per cent.– Reuters
Source : Business Times