KUALA LUMPUR: Malaysian palm oil futures climbed on Wednesday, on course for an eighth session of gains in nine, as a weaker ringgit and widening discounts to rival soft oils encouraged buying.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 67 ringgit, or 1.81%, to 3,759 ringgit ($802.69) a tonne by the midday break.
Malaysia’s end-September palm oil inventories ballooned to the highest in nearly three years, as a pick-up in production offset strong exports, data from the Malaysian Palm Oil Board showed on Tuesday.
Stockpiles are forecast to rise 8.2% to 2.5 million tonnes by the end of October as higher production trumps rising exports, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
Palm oil may rise to 3,919-4,008 ringgit range
Crude palm oil prices are likely to stay weak in October due to competition from Indonesia after Jakarta waived an export levy, but the downside will be capped by its attractive discount against competing edible oils, Ng said.
Global palm oil purchases are rising this quarter as buyers take advantage of the tropical oil’s widening discount to rival soyoil, which should entice price-sensitive consumers and boost biofuel usage, according to senior industry officials.
The ringgit, palm’s currency of trade, fell 0.26% against the dollar, making the commodity cheaper for buyers holding other currencies.
Dalian’s most-active soyoil contract rose 2.1%, while its palm oil contract gained 0.5%. Soyoil prices on the Chicago Board of Trade were down 0.5%.
Palm oil may test a support at 3,652 ringgit per tonne, with a good chance of breaking below this level and falling to 3,570 ringgit, Reuters technical analyst Wang Tao said.
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