KUALA LUMPUR: Malaysian palm oil futures rose to a two-month high on Tuesday as the ringgit slumped to a 5-1/2-year low and floods raised the prospect of tighter supplies.
The Malaysian ringgit fell to its lowest level since July 2009 at 3.5550 per dollar – making palm a cheaper vegetable oil option for foreign
investors – and the currency is expected to continue to underperform.
“A weaker ringgit will mean the Malaysian Derivatives Exchange will be supported,” said one trader with a foreign commodities firm in Kuala Lumpur.
The benchmark March palm oil contract rose to as much as 2,310 ringgit in early trade, the highest level since Nov. 4, before settling at 2,284 ringgit ($642) per tonne by Tuesday’s close, a gain of 0.9 percent.
Total traded volume stood at 46,406 lots of 25 tonnes, above the usual
Monsoon floods, which forced some Malaysian plantations and mills to temporarily stop operations, also kept prices propped up, with analysts and
traders expecting palm oil supply to tighten.
Malaysian palm oil stocks at the end of December likely fell for the first time in half a year, a Reuters survey of planters, traders and analysts showed, after monsoon floods disrupted harvesting and transportation in parts of the world’s second-biggest grower.
Inventories were seen at a five-month low of 2.02 million tonnes, with crude palm oil output expected to tumble 23 percent to 1.36 million tonnes. Official data from the Malaysian Palm Oil Board will be released on Jan. 12.
Traders said the palm contract was also tracking the rise in overseas soyoil markets.
The U.S. soyoil contract for March rose more than 2 percent in the previous session and was trading at 32.66 cents a pound late on Tuesday. The most active May soybean oil contract on the Dalian Commodity Exchange rose 0.9 percent.
But lingering concerns over volatile oil prices prevented a rally and forced palm to give up some of its earlier gains on Tuesday. The tropical oil is increasingly used as an additive in biofuels, but cheap crude oil prices makes this blending unprofitable.
Oil prices sank to fresh 5-1/2-year lows on Tuesday, extending losses after a 5 percent plunge in the previous session as concerns over a global supply glut intensified.
Palm, soy and crude oil prices at 1030 GMT
|MY PALM OIL||JAN5||2309||+11.00||2305||2333||585|
|MY PALM OIL||FEB5||2304||+19.00||2296||2326||1175|
|MY PALM OIL||MAR5||2284||+20.00||2272||2310||27581|
|CHINA PALM OLEIN||MAY5||5038||+18.00||4984||5050||393316|
|CBOT SOY OIL||MAR5||32.68||+0.30||32.61||32.81||3663|
|INDIA PALM OIL||JAN5||463.10||+0.30||460.90||465.50||1032|
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 = 3.556 Malaysian ringgit)
($1 = 6.2130 Chinese yuan)
($1 = 63.54 Indian rupee)
– Reuters ]]>