(Bloomberg) – Palm oil rebounded from a two-month low as the Malaysian currency dropped the most among Asian currencies against the U.S. dollar, boosting demand for ringgit-denominated futures.
The contract for March delivery advanced 1.2 percent to close at 2,524 ringgit ($767) a ton on the Bursa Malaysia Derivatives. Futures tumbled to 2,486 ringgit on Jan. 13, the lowest since Oct. 29. The advance today snapped eight straight sessions of declines, the longest streak since March. The market was closed for a holiday yesterday.
“Market gained on the back of a weak ringgit, keeping sellers on the sideline,” said Paramalingam Supramaniam, director at brokerage Pelindung Bestari Sdn. in Selangor. “We did see some buying in the cash market as prices are looking a little attractive after the sell-off.”
The ringgit dropped as U.S. retail sales figures topped estimates, bolstering the case for the Federal Reserve’s stimulus cuts. The currency fell 0.7 percent to 3.2865, according to data compiled by Bloomberg. The 14-day relative strength index for palm oil was at 31.58 on Jan. 13. A reading below 30 suggests to some analysts who study technical charts that the commodity may be set to rebound.
Shipments from Malaysia, the second-largest producer, fell 28 percent to 460,248 tons in the first 15 days of January from the same period last month, surveyor Intertek said today. Exports dropped 27 percent, according to SGS (Malaysia) Sdn.
Palm oil may rally to 2,800 ringgit in the first quarter as increasing demand, a low-output cycle and the possibility of heavy rainfall hampering harvesting may reduce stockpiles, Lee Shin Cheng, chairman of IOI Corp., said today.
Soybean oil for March delivery advanced 0.3 percent to 37.89 cents a pound on the Chicago Board of Trade. Futures fell to 37.42 cents on Jan. 8, the lowest price since July 2010. Soybeans were little changed at $13.075 a bushel.
Refined palm oil for May delivery dropped 1.2 percent to close at 5,780 yuan ($956) a ton on the Dalian Commodity Exchange. Soybean oil retreated 0.6 percent to end at 6,612 yuan.
