Malaysian crude palm oil futures ended 0.6 percent higher on Monday after touching fresh three-week lows earlier in the session over concerns that a stronger ringgit will hurt refiner margins. Traders are on the lookout for new cues after palm oil futures last week notched their biggest weekly fall since October as traders took profits from a recent weather-induced rally in agriculture markets as well as lower palm oil exports.
"The market was oversold so there's a bit of retracement, but the trading range is between 2,500 and 2,600 ringgit," said a trader with a foreign brokerage in Kuala Lumpur.
The benchmark November crude palm oil contract rose by 16 ringgit to 2,560 ringgit ($815.3) a tonne, after reaching an intraday low of 2,532 ringgit - a level unseen since July 30. Overall traded volume rose to 18,218 lots of 25 tonnes each from the usual 10,000 lots. The Malaysian ringgit gained half of a percent to a 13-year high on Monday as offshore funds flowed into local bond markets.
Margins for refiners narrowed on the strengthening as they buy vegetable oils in the local currency, earning dollars when they export palm oil products after processing, traders said. Crude rebounded to top $74 in Asian hours on a weaker dollar on bulging US inventories and a lack of hurricane activity in the Gulf of Mexico. Other vegetable oils were mixed. US soyaoil for September delivery rose more than half a percent in Asian hours after falling on Friday thanks to outlooks for a record large US soy crop for this year.
The most-active May soyaoil on China's Dalian Commodity Exchange fell 0.3 percent on Monday on continued market rumours about Beijing releasing its vegetable oil reserve to cap recent price rises. The contract lost 4.6 percent last week. "The rumours started early this month...but it has been keeping market sentiment on the downside," said a Shanghai-based oil analyst with a local brokerage. "Today's market also fell in tandem with (last week's decline in) US soyaoil on ample supply expectations."
INDONESIA PALM TRADES: In Indonesia, Jakarta-based PT KBN Nusantara, formerly known as the state marketing centre, sold 6,000 tonnes of crude palm oil in an auction on Monday with the top price at 8,033 rupiah ($0.896) per kg, against 8,016 rupiah a kg on Friday.
Producers in Medan, home to Indonesia's main palm oil export port of Belawan in the island of Sumatra, did not hold any auction. Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm olein - used as cooking oil - at 8,300 rupiah per kg on Monday against 8,400 rupiah per kg on Friday. PT Astra Agro Lestari offered 500 tonnes of super palm kernel oil (PKO)in an auction on Monday at $1,195 per tonne. Buyers bid at $1,128-$1,133 per tonne for the super PKO ex-factory Sari Aditya Loka 1 in Teluk Bayur, Jambi.