KUALA LUMPUR, March 11 (Reuters) – Malaysian palm oil futures snapped a five-day losing streak on Wednesday as the ringgit slid to its weakest in six years, although gains were capped by palm’s narrowing discount to rival soyoil.
The Malaysian ringgit MYR=MY touched a low of 3.7170 per dollar on Wednesday as Asian markets skidded on worries about an U.S. interest rates hike sooner than expected, sending the dollar to a 12-year high against the euro. EMRG/FRX MKTS/GLOB
By the end of the day the ringgit had recovered slightly, rising 0.08 percent to 3.6970 per dollar.
A weaker Malaysian currency makes the ringgit-priced feedstock cheaper for foreign investors.
Despite the weak currency, traders said some buyers were reluctant to book palm because its once wide discount to soyoil has been largely shaved off.
“With the weak ringgit, it should encourage more exports,” said one trader with a foreign commodities brokerage in Kuala Lumpur.
“But it’s not showing up on the export data yet. The reason is that the spread between palm and soy has narrowed, and people are trying to buy more soy than palm,” the trader added.
Palm olein’s POL-MYRBD-M1 discount to Argentina soyoil BO-ARGUPR-P1 is currently about $32, versus $27 earlier in March and $128 at the start of 2015.
By Wednesday’s close, the benchmark May contract 1FCPOc3 on the Bursa Malaysia Derivatives Exchange had edged up 1.74 percent to 2,276 ringgit ($616) a tonne, rising for the first time after a downtrend over the past five days.
Total traded volume stood at 42,575 lots of 25 tonnes, above the average 35,000 lots.
Export data from cargo surveyors on Tuesday showed that Malaysian palm oil shipments in the first ten day of March was between 12 and 19 percent weaker from the same period in February, with between 247,698 tonnes and 262,168 tonnes exported.
Industry regulator data meanwhile showed that Malaysian palm inventories at end-February shrank to their smallest in seven-months. Exports for the month, however, were at their weakest in nearly eight years.
In vegetable oil markets, the most active May soybean oil contract DBYcv1 on the Dalian Commodity Exchange fell 0.55 percent, while the U.S. soyoil contract for March BOH5 rose 0.26 percent.
Elsewhere, Brazilian government crop supply agency Conab trimmed its forecast for the 2014/15 soybean harvest to 93.3 million tonnes from its February outlook of 94.6 million tonnes. The estimates are still seen at a record, well above last year’s 86.1 million tonnes.
In other markets, Brent crude oil slipped to a one-month low below $56 a barrel before steadying as a rally in the U.S. dollar and global oversupply weighed.O/RPalm, soy and crude oil prices at 1030 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR5 2277 +37.00 2249 2277 8
MY PALM OIL APR5 2281 +49.00 2236 2281 2991
MY PALM OIL MAY5 2276 +39.00 2237 2280 24259
CHINA PALM OLEIN SEP5 4742 -22.00 4706 4752 396420
CHINA SOYOIL SEP5 5468 -24.00 5436 5488 366742
CBOT SOY OIL MAY5 31.24 +4.90 30.82 31.30 9139
INDIA PALM OIL MAR5 448.80 +4.90 444.70 449.70 911
INDIA SOYOIL APR5 578.15 +2.25 574.30 579.40 16865
NYMEX CRUDE APR5 48.36 +0.07 48.30 49.05 25137
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 = 3.6970 ringgit)
($1 = 6.2613 Chinese yuan renminbi)
($1 = 62.7525 Indian rupees)