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Thursday, 03 May, 2018

Palm up after six days of falls, supported by weaker ringgit

KUALA LUMPUR (May 2): Malaysian palm oil futures rose in early trade on Wednesday, in line for its first day of gains in seven, correcting from a sharp drop in the previous session and supported by a weaker ringgit.

Weakness in the ringgit, palm's currency of trade, typically makes the tropical oil cheaper for holders of foreign currencies, lending support to demand. 

The ringgit weakened around noon on Wednesday to its lowest level against the dollar since March 1, and was last down 0.1% at 3.9250. It has steadily declined in the past month, and has lost 1.6% of its value since the start of April.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange rose 0.5% to 2,373 ringgit (US$604.59) a tonne at midday break.

Trading volumes stood at 12,860 lots of 25 tonnes each at midday break.

"We're seeing some upside today, as we saw a sharp drop over the last three days," said a futures trader in Kuala Lumpur.

"There is also some rebound on a weak ringgit," he added. 

Palm had fallen to a two-week low in its previous session, and was down 1.3% last week as traders turned bearish over weak export demand.    

Malaysian palm oil product exports fell 5.7% for the full month of April versus March, inspection company AmSpec Agri Malaysia reported. Meanwhile, cargo surveyor Societe Generale de Surveillance showed a 4.5% decline for the same time period as Indian demand weakened.

In other related oils, the Chicago July soybean oil contract rose 0.7%, while the September soybean oil on China's Dalian Commodity Exchange was trading flat at around 0500 GMT.

The Dalian September palm oil contract declined 0.1%. 

Palm oil is impacted by movements in rival edible oils, as they compete for a share in the global vegetable oils market.


 Palm, soy and crude oil prices, as of 0452 GMT

Contract  Month Last Change Low High Volume
MY PALM OIL  MAY8  2340 +16.00 2340 2340 1
MY PALM OIL  JUN8  2371 +11.00 2366 2377 1276
MY PALM OIL  JUL8  2373 +11.00 2367 2378 5491
CHINA PALM OLEIN SEP8  4976 -8.00 4950 4994 125844
CHINA SOYOIL  SEP8  5736 +0.00 5682 5756 178778
CBOT SOY OIL  JUL8  30.53 +0.00 30.33 30.55 4512
INDIA PALM OIL  MAY8  642.30 +1.70 642.30 643.3 61
INDIA SOYOIL  MAY8  758.2 -0.90 757.5 758.2 160
NYMEX CRUDE  JUN8  67.52 +0.27 67.35 67.65 27674

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
 India soy oil in Indian rupee per 10 kg
 Crude in U.S. dollars per barrel
 
(US$1 = 3.9250 ringgit)
(US$1 = 66.7350 Indian rupees)
(US$1 = 6.3586 Chinese yuan)  

Source : The Edge Markets

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