Palm hits two-week high on ringgit weakness

Malaysian palm oil futures hit their highest level in nearly two weeks on Tuesday as the ringgit continued to weaken near 1998 lows, although declines in competing markets dragged on appetite for the edible oil. By the close on Tuesday, the benchmark palm oil contract for November on the Bursa Malaysia Derivatives Exchange had lost 0.68 percent to 2,058 ringgit ($503.67) a tonne, after hitting 2,069 ringgit, the highest since August 5.
Traded volume stood at 52,024 lots of 25 tonnes each, above the roughly 35,000 lots usually traded by the close. The ringgit gave some support to the tropical oil as the benchmark palm is priced in the local currency, traders said, noting that the benchmark was trading in a range.
"Although the ringgit is weak, RBD palmoil in China hasn't moved and US soyoil is laggard," said a trader with a foreign commodities brokerage in Kuala Lumpur, referring to China's Dalian Commodities Exchange. "It was more of a retracement after a general decline in the market." Palm futures fell for a seventh consecutive week last week, after data showed a build-up in Malaysia's stocks due to higher production and a slowdown in demand.
Wang Tao, a Reuters market analyst for commodities technicals, said palm oil faces a resistance at 2,052 ringgit per tonne and may either hover below this level or retrace to a support at 2,017 ringgit. The ringgit, which has been the worst performing emerging Asian currency so far in 2015, continued to decline on Tuesday to near 1998 pre-peg lows after an extended selloff in local stocks and bonds.
The US September soyoil contract was down 0.65 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange was relatively flat, up 0.32 percent. In related news, India plans to spend $1.5 billion in the next three years to help farmers grow oil palm trees in an area the size of New Jersey, government sources said. US oil prices fell towards six-year lows after stock markets tumbled in China, the world's largest energy consumer, adding to worries about global fuel demand at a time of heavy oversupply.