Malaysian palm oil futures edged up on Monday supported by weakness in the ringgit, its currency of trade, and with traders bullish about the prospects of improving demand. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 0.4 percent to 2,425 ringgit ($619.25) a tonne at the close, after falling to a one-week low of 2,407 ringgit earlier in the session.
Trading volumes stood at 52,775 lots of 25 tonnes each on Monday evening. "The market is supported in anticipation of better exports ... But lower soyaoil seems to be checking palm's upside," said a Kuala Lumpur-based trader, referring to soyaoil on the US Chicago Board of Trade.
Another trader in Kuala Lumpur added that a slightly weaker ringgit also added to palm's gains, as this makes the edible oil cheaper for holders of foreign currencies. The ringgit slipped 0.2 percent to 3.9160 against the dollar on Monday evening.
Palm oil exports from Malaysia, the world's second largest producer, weakened 2-5 percent in the first half of March versus the corresponding period in February, according to shipment data. Demand is expected to pick up from regions such as the Middle East, as buyers stock up ahead of Ramadan which begins in mid-May this year.
The Muslim holy month sees devotees break day-long fasts with communal feasting, which incurs higher usage of palm oil for cooking purposes. Buyers usually start increasing purchases of palm oil one to two months ahead of the festivities. In other related oils, the Chicago Board of Trade's May soyabean oil contract rose 0.2 percent, while May soyabean oil on China's Dalian Commodity Exchange fell 0.2 percent.
The Dalian May palm oil contract was also down 0.3 percent. Palm oil prices are affected by movements in rival edible oils as they compete in the global vegetable oils market.