KUALA LUMPUR, Aug 6: Malaysian palm oil futures edged up on Tuesday on the firmer ringgit currency against the U.S. dollar and as higher export demand cuts into stocks.
The ringgit gained against the greenback, prompting plantation firms to stay in the crude palm oil futures market as they profit from any Malaysian currency appreciation when they sell the feedstock to refiners.
Palm oil futures could recoup a 7.7 percent loss made so far this year as exports rose last month, signalling a further decline in stocks when the Malaysian Palm Oil Board (MPOB) issues July industry data on Aug 14.
‘The market is slowing down and people are taking it easy for the four-day weekend. The next lot of data will only come next week and much of it has been priced in,’ said a trader with a foreign commodities brokerage.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange rose 0.5 percent to 2,250 ringgit ($700) per tonne by the midday break.
Total traded volume stood at 5,986 lots of 25 tonnes each, below the average 17,500 lots. This stemmed from investors buying to exit short positions instead of purchases from fresh cash.
The market will be closed from the afternoon session of Aug 7 and will re-open on Aug 12. Markets in Indonesia, the world’s largest palm oil producer, are closed this week.
Technicals were bearish. Reuters analyst Wang Tao said Malaysian palm oil futures is expected to drop to a support at 2,221 ringgit per tonne, a break below which will lead to a further loss to 2,190 ringgit.
Fundamentals were more mixed. A poll issued ahead of MPOB data showed stocks in Malaysia, the second largest producer, could fall to 1.6 million tonnes in July – below a two-year low of 1.65 million tonnes hit in June.
Forecasts of crop friendly weather across the U.S. Midwest have fanned expectations of bumper crops in agriculture markets, including soybeans, which are tracked by Malaysian palm oil prices. The U.S. Department of Agriculture will release updated production data on Aug 12.
A record soybean crop could replenish historically low soy supplies and yield more soyoil, narrowing the edible oil’s global premium to palm oil and grabbing demand.
The U.S. Soyoil contract for December edged up 0.2 percent in Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange also rose 0.2 percent.
In other markets, Brent futures slipped towards $108 a barrel on Tuesday as supply fears from key exporters such as Libya eased, but losses were stemmed with a forecast fall in crude inventories in the world’s largest oil consumer the United States. Palm, soy and crude oil prices at 0513 GMT
Contract Month Last Change Low High Volume MY PALM OIL AUG3 0 +0.00 0 0 0 MY PALM OIL SEP3 2279 +11.00 2268 2285 333 MY PALM OIL OCT3 2250 +10.00 2238 2256 3251 CHINA PALM OLEIN JAN4 5450 -4.00 5442 5468 134424 CHINA SOYOIL JAN4 7024 +16.00 7014 7038 305862 CBOT SOY OIL DEC3 43.29 +0.08 43.06 43.31 1975 NYMEX CRUDE SEP3 106.47 -0.09 106.25 106.62 5568
Palm oil prices in Malaysian ringgit per tonne CBOT soy oil in U.S. Cents per pound Dalian soy oil and RBD palm olein in Chinese yuan per tonne Crude in U.S. Dollars per barrel ($1 = 3.2315 Malaysian ringgit)
(agencies)
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