Malaysian palm oil futures rose for a second consecutive session on Wednesday, supported by strength in soyaoil on the Chicago Board of Trade and a weaker ringgit. Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange rose 0.5 percent to 2,721 ringgit ($616.03) a tonne at the end of the trading day.
Traded volumes stood at 50,006 lots of 25 tonnes each in the evening. "A weaker ringgit and a rebound in the Chicago Board of Trade overnight supported a recovery in palm oil, but it lacks bullish news to support a strong rally," said a futures trader from Kuala Lumpur. The ringgit weakened 0.1 percent to touch 4.4170 against the dollar on Wednesday evening, after hitting an intraday low of 4.4230. A weaker ringgit usually supports palm oil prices by making it cheaper for holders of foreign currencies.
Palm oil prices are also impacted by the performance of related vegetable oils, including soyaoil, as they compete for a share in the global vegetable oil market. Soyabean oil on the Chicago Board of Trade rose 0.1 percent on Wednesday, holding steady after a near 2 percent decline on Monday. In other related edible oils, the September soyabean oil contract on the Dalian Commodity Exchange rose 0.1 percent, while the September contract for palm olein on the Dalian Commodity Exchange was up 0.7 percent.
Palm has been range-bound since late-February as market signals remain mixed. Traders say March demand lacks strength, while and output growth is still uncertain. Cargo surveyor data showed a drop in Malaysian palm oil exports during the March 1-25 period, down 1.2-1.5 percent from the corresponding period in February.
Malaysian production in February dropped 1.4 percent on the month. March data is however expected to show a recovery in line with the seasonal trend but recovery growth remains uncertain.Palm oil may end its current downtrend around support at 2,533 ringgit per tonne and then resume its uptrend from the August 25, 2015 low of 1,863 ringgit over the next three months, according to a Reuters market analyst for commodities and energy technicals.
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