Palm Oil Set to Snap Losing Streak as Ringgit Weakens
Category: Oilseeds
(The Times of India) – Malaysian palm oil futures rose in early trade on Thursday, on track to snap four straight sessions of losses, lifted by a weaker ringgit which hit a one-week low.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.6 percent at 2,515 ringgit ($586.66) a tonne at the midday break.
Traded volumes stood at 17,659 lots of 25 tonnes each at the midday break. “The market is up on currency play as the ringgit is weaker today,” said a trader from Kuala Lumpur.
“Maybe partly it is also supported by exports, but it is mostly currency related.” Palm oil prices are affected by the movements of the ringgit, its currency of trade.
A weaker ringgit typically makes the tropical oil cheaper for holders of foreign currencies.
The ringgit weakened 0.2 percent against the dollar on Thursday, after having touched a one-week low of 4.2885 earlier in the session.
Cargo surveyor export data released on Wednesday showed stronger on-month shipments from Malaysia in May. Intertek Testing Services showed a 16 percent rise from April, while Societe Generale De Surveillance reported a 15.4 percent gain.
Palm oil usage increases during the fasting month of Ramadan, which sees Muslims in regions such as India, Pakistan and the Middle East break day-long fasts with communal feasting, incurring higher usage of palm oil for cooking.
Buyers of the tropical oil usually stock up on purchases one to two months ahead of Ramadan, which this year began on Saturday.
Palm oil may bounce to a resistance at 2,523 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals. In other related oils, soybean oil on the Chicago Board of Trade was up 0.3 percent, while the September soybean oil contract on the Dalian Commodity Exchange was down 0.9 percent.
The September contract for palm olein declined 0.3 percent. Palm oil prices are also impacted by the performance of related edible oils, as they compete for a share in the global vegetable oils market.
