Malaysian palm oil futures rose for a fifth straight day on Monday and climbed to their highest in nearly four months, as the ringgit slid to a nine-month low, making the tropical commodity cheaper for foreign investors and refiners. The Malaysian ringgit slid as much as 0.7 percent on Monday to its February 14 low of 3.3135 per US dollar on the back of data showing foreigners cut their bond holdings in September, as well as on dollar demand linked to the daily fixing.
"The palm market is holding very well and firming up on the back of falls in the ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur, who expects resistance at 2,350 ringgit and support at 2,250 ringgit over the next 1-2 days. "The bulls should use the weak ringgit to push (the market) higher," said another Kuala Lumpur-based dealer.
The benchmark January contract on the Bursa Malaysia Derivatives Exchange settled up 1.3 percent at 2,336 ringgit ($704) per tonne by Monday's close, after hitting a high of 2,345 ringgit, a level unseen since July 11. Total traded volume stood at 42,279 lots of 25 tonnes, well above the usual 35,000 lots.
Some traders said palm could face a round of profit-taking in the coming days after a run-up of around 10 percent from its October 20 low of 2,112 ringgit. The Malaysian contract, which sets the tone for global palm oil prices, last week posted its biggest weekly rise since November 2013. The rise was helped by projections of smaller supplies and easing inventories amid an anticipated boost in food and fuel demand.
Indonesia's output, on the other hand, could rise by 7 percent to 31.5 million tonnes in 2015 as trees mature, Derom Bangun, chairman of the Indonesian Palm Oil Board told Reuters on Monday, although exports are expected to dip as the world's No 1 grower takes up more biodiesel for domestic consumption. Palm oil is used as a cooking oil and also to make a range of consumer goods, from fast-food snacks to soaps and cosmetics. The tropical oil is also increasingly used as an additive to fossil fuels to produce biodiesel.
Malaysian exports of palm oil products fell 2 percent to 1.46-1.47 million tonnes shipped in October compared to a month ago, data from cargo surveyors Intertek Testing Services and Societe Generale de Surveillance showed on Friday. In other competing vegetable oil markets, the US soyoil contract for December fell 0.3 percent in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange rose 0.3 percent.
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