Palm oil inches up

September 07, 2013

Palm oil
Palm oil

Malaysian palm oil futures rose on Friday, posting their fourth straight weekly gain, as a weaker ringgit continued to attract more buyers. The Malaysian currency lost a further 0.7 percent against the dollar on Friday, prompting a surge in buying interest in the tropical oil. A weak ringgit makes feedstock cheaper for overseas buyers and refiners.

But gains were capped by investor caution ahead of the September 1-10 export numbers and official August stocks data from the Malaysian Palm Oil Board (MPOB) due on Tuesday. Inventory levels at end-August likely rose to 1.73 million tonnes, their highest level in three months as output outweighed exports, a Reuters survey showed. “Palm oil rebounded back above the 2,400 ringgit level mostly due to a weakening ringgit. Next week, we will have MPOB data coming in, which will likely determine a new price range,” said a trader with a foreign commodities brokerage in Kuala Lumpur.

The benchmark November contract on the Bursa Malaysia Derivatives Exchange ended 1.4 percent higher at 2,445 ringgit ($734) per tonne, after trading in a range of 2,414 to 2,461 ringgit. Total traded volume stood at 30,151 lots of 25 tonnes each, lower than the usual 35,000 lots. Palm oil ended the week 1.7 percent higher, its fourth straight weekly gain, as a weaker ringgit outweighed a US Department of Agriculture report that showed the dry weather damage to US soy crop was not worse than expected.

Palm tracks the soy market closely as palm oil is used as a substitute to soybean oil. Technicals showed palm oil may consolidate in a range of 2,385-2,440 ringgit per tonne for one trading session before falling further, according to Reuters market analyst Wang Tao. In vegetable oil markets, the US soyaoil contract for December gained 1.1 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange edged up 1.6 percent. Courtesy Reuters

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