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Thursday, February 29, 2024

Palm extends gains on weaker ringgit, improved China demand

MUMBAI: Malaysian palm oil futures extended gains on Friday to end the week with a nearly 4% climb, tracking upside in rival soyoil, while a weaker ringgit and improved demand from China also supported prices.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 95 ringgit, or 2.61%, to close at 3,733 ringgit ($790.05) per metric ton, after rising nearly 2.5% on Thursday.

Earlier this week, the contract fell to the lowest level since June 23 at 3,520 ringgit.

“Palm oil was in oversold territory, and it received support from a weak Malaysian currency and increased Chinese buying,” said a Mumbai-based edible oil trader.

The Malaysian ringgit was down 0.32% against the U.S. dollar. Weakness in the ringgit, palm’s currency of trade, usually makes the tropical oil cheaper for foreign buyers.

Palm oil rises on demand, Indonesia’s move to keep exports flexible

Exports of Malaysian palm oil products for Oct. 1-10 rose 12.5% to 29.6% from a month earlier, data from cargo surveyors showed.

Soyoil futures on the Chicago Board of Trade jumped 1.87%, as of 1020 GMT, after the U.S. government lowered its U.S. production forecast further than analysts had expected.

A rally in crude oil prices also supported vegetable oil prices as stronger crude oil make palm oil a more attractive option for biodiesel feedstock.

Indonesia launched the crude palm oil (CPO) futures exchange on Friday, but it will not make exports via the exchange mandatory.

Anticipating that Jakarta would mandate exports, Indonesian sellers rushed to clear inventories. However, with the current scenario, it is unlikely that sales will be aggressive, which could provide support for prices.

The market has factored inputs such as rising palm oil reserves and ample supply in India and there was no fresh bearish news to keep the market under pressure, said a Kuala Lumpur-based broker.

Malaysia’s palm oil stocks at September-end rose 9.6% to hit an 11-month high of 2.31 million tons, data from the Malaysian Palm Oil Board showed on Tuesday.

Top buyer India’s palm oil imports in September fell 26% month-on-month to 834,797 metric tons, the lowest in three months, a trade body said on Friday.

A flood of cheap sunflower oil from Russia and Ukraine is putting downward pressure on palm oil prices as the two top producers take advantage of currency depreciation to grab a larger share of the edible oils market.

Palm extends gains on weaker ringgit, improved China demand

Source: Brecorder

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