Malaysian palm oil futures rose to the highest in 4-1/2-years on Thursday evening, charting a third straight session of gains on a weaker ringgit and tight supplies. Palm saw three straight sessions of declines last week, pulling back from its highest level in four years, but the gains this week have recouped nearly all those losses.
Benchmark palm oil futures for February delivery on the Bursa Malaysia Derivatives Exchange were up 1.9 percent at 3,185 ringgit ($713) a tonne at the end of the trading day, the strongest daily gains in over a month. It earlier touched 3,193 ringgit, its highest since May 16, 2012.
Traded volumes stood at 56,259 lots of 25 tonnes each, above the 2015 average of 44,600 lots traded in a day. "Palm is up mainly on the weaker ringgit," said a trader from Kuala Lumpur, adding that technical buying was also supporting the market.
The ringgit, palm's currency of trade, fell 0.4 percent to reach 4.4620 per US dollar at noon, its weakest in two weeks. A weaker ringgit makes palm oil cheaper for holders of foreign currencies. The ringgit's weakness follows the dollar's surge to a near 14-year high after the Federal Reserve raised interest rates by 25 basis points. The US central bank also increased the number of projected rate hikes for 2017.
Tight supplies in the market also contributed to the rise in prices, another trader said, as year-end production tends to decline. Government data this week showed a 6.1 percent decline in Malaysia's November production, and traders expect to see further output falls in December as year-end monsoon rains and floods disrupt the fruit harvesting process.
In related vegetable oils, the January soyabean oil contract on the CBOT was up 0.7 percent, while the May soyabean oil contract on the Dalian Commodity Exchange rose 0.5 percent. The May contract for Dalian palm olein surged 2.2 percent. Palm prices are influenced by other vegetable oils, as they compete for shares in the global edible oils market.
Comments
Comments are closed.