Malaysian palm oil futures rose for the first time in a week on Thursday as investors squared positions ahead of a long holiday weekend, but the gains were not enough to prevent the contract from recording its second straight monthly drop. A strong ringgit and worries over rising palm supplies in key growers had seen the tropical oil succumb to a six-day losing streak, which dragged benchmark prices to their weakest since September 2014.
However, the closure of Malaysian markets from Friday to Monday prompted some investors to square positions, which helped reduce selling pressure, market players said. The benchmark July contract on the Bursa Malaysia Derivatives exchange inched up 1 percent to 2,102 ringgit ($590) a tonne by Thursday's close.
The gain, however, was not enough to overturn overall losses for April, with prices down 3.8 percent. Prices also notched their biggest weekly drop in six weeks. Despite weak exports in April, anticipation of firmer demand from key customers next month also provided support for prices. "Olein demand from India is rumoured to pick up in May," said a trader with a local commodities brokerage in Malaysia.
"Prices will be ranging between 2,050-2,100 ringgit, unless the ringgit weakens to 3.70 again, which is highly unlikely." Cargo surveyor Intertek Testing Services reported that exports of Malaysian palm products in April fell 7.2 percent from March to 1.07 million tonnes, with shipments of crude palm plunging more than 80 percent.
Another cargo surveyor Societe Generale de Surveillance showed exports for the same period fell 5.5 percent. Buyers are waiting for next month when a duty-free policy for the crude grade takes effect. Malaysia, the world's No.2 palm grower, will remove its crude palm oil export tax for May after imposing a 4.5 percent rate in April.