Malaysian palm oil futures rose more than 1 percent on Monday evening, its sharpest daily gain since the start of the year, on expectations that demand will recover and on a weaker ringgit, the tropical oil's currency of trade. Palm oil prices had been weighed down last week as the ringgit strengthened after the central bank raised interest rates.
A stronger ringgit usually makes palm oil more expensive for holders of foreign currencies and reduces demand. The currency however fell 0.3 percent against the dollar at 3.8790 in the evening. The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was up 1.4 percent at 2,519 ringgit ($649.39) a tonne at the close of trade, its sharpest gain since January 3.
Trading volumes stood at 27,261 lots of 25 tonnes each at the end of the trading day. Expectations of stronger exports is supporting the market, said a trader from Kuala Lumpur.
"We're expecting to see smaller negative growth," he said, referring to cargo surveyors' export data scheduled for release on Wednesday. Palm oil shipments from Malaysia during January 1-25 fell about 7 percent versus the corresponding period last month. The drop is weaker compared with the January 1-20 period, which saw declines of 13-16 percent.
Expectations of shrinking stockpiles and gains in competing vegetable oils such as soyaoil also supported palm, another trader said. Stock levels in Malaysia rose to an over two year high of 2.7 million tonnes at end-December, but is forecast to decline from those levels as output eases in January in line with seasonal trend.
Palm oil prices track movements in other related edible oils, as they compete for a share in the global vegetable oils market. The March soyabean oil contract on the Chicago Board of Trade rose 0.4 percent, while the May soyabean oil on the Dalian Commodity Exchange was up 0.4 percent. In other related edible oils, the Dalian May palm oil contract also edged up 0.5 percent.
Comments
Comments are closed.