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Tuesday, November 30, 2021

Palm oil rebounds tracking small recovery in soy

Palm oil rebounds tracking small recovery in soyJAKARTA: Malaysian palm oil futures posted their biggest gain in more than three weeks on on Thursday, tracking a recovery in the soy market, as buyers were tempted back after by market weakness.

By the close, the benchmark palm oil contract for October on the Bursa Malaysia Derivatives Exchange ended 0.95 percent higher to 2,017 ringgit ($ 503.24) a tonne. It regained some of its 2.2 percent lost posted a day earlier.

Prices earlier touched a more than 11-month low of 1,958 ringgit, but later recovered losses to hit a high at 2,020 ringgit. Palm is down 1.2 percent so far this week.

Traded volume stood at 51,651 lots of 25 tonnes each, above the roughly 35,000 lots usually traded by the close.

“The market is a little bit oversold now, so there’s a retracement there,” said a trader with a foreign commodities brokerage in Kuala Lumpur.

Palm oil price discounts compared to soybean oil widened to around $ 150 per tonne, from about $ 120-$ 130 in the past couple of months, said Rabobank analyst Pawan Kumar. The widening discounts make palm more attractive to buyers.

The Malaysian ringgit was firmer, but still hovered near its 17-year low, offering support to palm oil prices for overseas customers as benchmark palm oil is priced in the local currency.

However, the US Department of Agriculture forecast the 2015-16 soybean harvest at 3.916 billion bushels based on an average yield of 46.9 bushels per acre. Both figures are better than previously estimated, capping the increase in palm oil prices.

In other vegetable oils, the US September soyoil contract rose 0.2 percent in late Asian trade, rebounding from its biggest loss in more than a month in the previous session, while the most active soybean oil contract on the Dalian Commodity Exchange inched up 0.04 percent.

Crude oil rose as lower US crude stocks and optimistic global demand projections overrode concerns about a glut of supply.

China let its currency decline for the third day on Thursday, raising concern that demands could fall from the top palm oil buyer.

Asian shares gained taking reassurance from China’s central bank that there was no basis for further yuan depreciation after it devalued the currency earlier this week.

Copyright Reuters, 2015

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