MUMBAI: Malaysian palm oil futures extended gains on Friday on a weaker ringgit, an improvement in demand from China and as top producer Indonesia clarified that it would not make exports mandatory via a new exchange, easing concerns about supply pressures.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 46 ringgit, or 1.26%, to 3,684 ringgit ($778.69) per metric ton by the midday break, after rising nearly 2.5% on Thursday.
Earlier this week, it fell to the lowest level since June 23 at 3,520 ringgit. “Palm oil was in oversold territory, and it received support from a weak Malaysian currency and increased Chinese buying,” said a Mumbai-based edible oil trader.
The Malaysian ringgit was down 0.45% against the US dollar. Weakness in the ringgit, palm’s currency of trade, usually makes the tropical oil cheaper for foreign buyers. Exports of Malaysian palm oil products for Oct. 1-10 rose 12.5% to 29.6% from a month earlier, data from cargo surveyors showed. Soyoil futures on the Chicago Board of Trade were up 0.79%, as of 0436 GMT.
Indonesia launched the crude palm oil (CPO) futures exchange on Friday, but it will not make trading via the exchange mandatory.
Authorities in the Southeast Asian country had previously planned to make it mandatory for all CPO exports to go through the exchange to drive global palm oil prices and create benchmarks similar to those in Kuala Lumpur and Rotterdam.
Anticipating that Jakarta would mandate exports, Indonesian sellers rushed to clear inventories. However, with the current scenario, it is unlikely that sales will be aggressive, which could provide support for prices.
The upside in palm oil was capped due to a build-up of stocks and pressure from rival edible oils, said the trader. Malaysia’s palm oil stocks at September-end rose 9.6% to hit an 11-month high of 2.31 million tons, data from the Malaysian Palm Oil Board showed on Tuesday.
Comments
Comments are closed.