Palm oil jumps to highest in over four months

Malaysian palm oil futures rose 3 percent on Monday, their biggest intraday gain in more than four months, buoyed by early losses in the ringgit and lower than forecast end-stocks data from an industry regulator. A weaker ringgit, palm's currency of trade, typically lends support to palm oil prices because it makes the tropical oil cheaper for holders of foreign currencies.
The ringgit weakened nearly 1 percent against the dollar to a four-month low in early trade on Monday but recovered to close flat at 3.9480 on Monday evening. The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 1.5 percent to 2,416 ringgit ($611.96) a tonne at the end of the trading day. Earlier in the session, it jumped 3 percent to 2,452 ringgit, its highest since April 10.
Trading volume stood at 67,630 lots of 25 tonnes each at the close. "Crude palm oil gains on the weaker ringgit and lower stock levels," said a Kuala Lumpur-based futures trader. "Gains should be sustainable as long as the ringgit doesn't strengthen again too quickly."
Another trader, however, said palm's gains might not be sustained. "The ringgit will strengthen in a week and then palm oil will fall again," he said, adding that palm's gains had eased in the later trading session as the ringgit recovered losses.
Palm oil prices have been on a downward trend since early last month on the back of weaker demand. They fell to a more than two-year low this month before climbing to a one-month peak in early trade on Monday. However, lower than forecast end-April stockpiles in Malaysia lent support to palm prices, the traders said.
Data from the Malaysian Palm Oil Board (MPOB) showed April end-stocks in Malaysia, the world's second-largest palm oil producer, dropped 6.4 percent from the previous month to 2.17 million tonnes, their lowest level since September.
Palm oil could rise towards 2,466 ringgit a tonne, having cleared resistance at 2,439 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related oils, the Chicago July soyabean oil contract was down as much as 0.2 percent while September soyabean oil on China's Dalian Commodity Exchange fell by up to 1 percent.
The Dalian September palm oil contract slipped by up to 0.4 percent. Palm oil is affected by movements in rival edible oils that compete for a share of the global vegetable oils market.