Malaysian palm oil surged to its highest level in about six months in on Monday, tracking a rally in its rival oilseed soya and gaining on forecasts of weaker production growth for the month of October. The weakness in the ringgit, palm's traded currency, also lent support to the market, as it makes the tropical oil cheaper for foreign currency holders. It fell 0.4 percent to reach 4.2150 against the dollar in the evening.
Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange rose 4.1 percent to 2,768 ringgit ($666) a tonne at the end of the trading day, its strongest daily gain in over a year. It also hit an intraday high of 2,778 ringgit, its highest level since April 5. Traded volumes stood at 56,392 lots of 25 tonnes each on Monday evening, higher than the 2015 daily average of 44,600 lots. Palm oil primarily rose after strong gains in soyaoil, said three traders based in Kuala Lumpur, while other factors such as slower output growth and the weakening ringgit lent support to the market.
"We're getting more news from planters that production is not as good as it could be," said a trader, reflecting the lagging effects of last year's crop-damaging El Nino. "We're also entering the monsoon season, and are seeing heavy rains in Johor," added the trader, explaining that rains from the year-end monsoon season could disrupt palm oil production in the short term. Palm oil prices are also influenced by soyaoil's performance, because they compete for a share in the global vegetable oils market.
The December soyabean oil contract on the Chicago Board of Trade was up 1.9 percent, while the January soyabean oil contract on China's Dalian Commodity Exchange jumped 5 percent. Soyaoil prices was supported by news of Chinese soyabean importers signing agreements to buy 5.1 million tonnes of US soyabeans late Friday night. In other related oils, the January contract for palm olein on the Dalian Commodity Exchange surged 5 percent on Monday. A bullish target at 2,814 ringgit per tonne has been established for palm oil, according to technical analysis by Wang Tao, a Reuters market analyst for commodities and energy technicals.
Comments
Comments are closed.