Malaysian palm oil made its biggest gains in four weeks on Thursday, buoyed by a weakening ringgit, strong soy oil markets, and more trades to clear positions ahead of the end-of-month rollover. "The market is up today on the back of soybean oil," said a trader with a foreign commodities brokerage in Kuala Lumpur, adding that the weakening of the Malaysian ringgit against the US dollar also provided support.
The ringgit retreated 0.32 percent to 3.2715 against the dollar on Thursday after three days of gains. A weaker ringgit makes palm oil more attractive for international buyers as it makes the edible oil cheaper for traders holding dollars. Traders were also clearing near-month positions and entering the active month, said another trader at a foreign commodities brokerage in Kuala Lumpur, adding that positions needed to be cleared by end of the month or traders would risk a drop in liquidity.
"Rollover activity is going on for December and January and positions are building up for February and March," the trader said. By Thursday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had advanced 1.69 percent to 2,171 ringgit ($663.61) per tonne, its highest level since last Tuesday and the biggest single-day climb since September 25.
Technicals showed palm oil is expected to test resistance at the 2,178 ringgit level, as it has overcome a barrier at 2,150 ringgit, said Reuters market analyst Wang Tao. In other markets, Brent crude oil stabilised below $85 a barrel on Thursday as strong European and Chinese data offset a slide triggered by a higher-than-expected build in US crude stocks. In competing vegetable oil markets, the most active January soybean oil contract on the Dalian Commodities Exchange rose 1.47 percent during Asian trade, while the US soyoil contract for December rose 0.5 percent.
Comments
Comments are closed.