KUALA LUMPUR: Malaysian palm oil futures rose more than 1 percent to its highest in over two weeks on Thursday, gaining on the back of a weaker ringgit and a favourable palm oil-to-gasoil spread.
A weaker ringgit, palm’s currency of trade, usually makes palm oil cheaper for foreign buyers.
The currency recorded a fourth straight day of losses on Thursday, falling to its lowest against the US dollar since Jan. 2. It was last down 0.3 percent at 4.0400 per dollar.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was up 1.2 percent at 2,343 ringgit ($579.95) a tonne at the close of trade, charting a second day of gains.
The contract touched a high of 2,344 ringgit, its strongest since June 12.
Trading volumes stood at 42,839 lots of 25 tonnes each on Thursday evening.
A Singapore-based futures trader said the market was supported by a weakening ringgit and a competitive spread between palm oil and gasoil.
Gains in oil prices have made production of biodiesel, in which crude palm oil is used as feedstock, more economical. Gasoil’s price spread over palm recently widened to its highest in nearly four years, and was last around $89 on Thursday.
Earlier in the day, the trader said news of a proposal by the US Environmental Protection Agency to set a higher biofuels blending mandate lent some support to palm prices.
In other related oils, the Chicago July soybean oil contract slipped 0.1 percent, while September soybean oil on China’s Dalian Commodity Exchange was trading flat at around 1145 GMT.
Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market.
Source: Brecorder
