Malaysian palm oil futures hit a one-week high in trade on Wednesday, bouncing back from a more than one-and-a-half-year low earlier this week, supported by overnight gains in soyaoil on the Chicago Board of Trade. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 1.1 percent at 2,440 ringgit ($625.00) a tonne at the close of trade, charting a third consecutive session of gains.
Earlier in the session it climbed to its highest level since March 7 at 2,442 ringgit. Palm had fallen to its lowest level since August 2016 at 2,350 ringgit a tonne on Monday. Trading volumes stood at 70,116 lots of 25 tonnes each on Wednesday evening. "The market is most likely tracking soyaoil, coupled with some technical correction," said a futures trader in Kuala Lumpur.
Another trader said he still expected prices to fall to the 2,300 ringgit range after the Muslim fasting period of Ramadan, which begins in mid-May this year. "Markets like the Middle East and North Africa will start buying for Ramadan from end-March to mid-April," he said. "But demand growth will be standard and prices will drop afterwards."
The month of Ramadan sees Muslims worldwide fast for the day before breaking it with communal feasting, incurring higher usage of palm oil for cooking purposes. Buyers of the oil usually stock up about a month ahead of Ramadan. The Chicago Board of Trade's May soyabean oil contract gained 1.5 percent on Tuesday and was slightly down 0.03 percent on Wednesday.
The May soyabean oil on China's Dalian Commodity Exchange rose 0.4 percent and the Dalian May palm oil contract climbed 0.5 percent. Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market. Palm oil may bounce into a range of 2,435-2,449 ringgit per tonne, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
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