(Aug 19): Malaysian palm oil futures rose on Friday to post their third consecutive weekly gain, boosted by tight supplies and expectations of higher exports.
Benchmark palm oil futures for November on the Bursa Malaysia Derivatives Exchange rose 0.1% to RM2,578 (US$643) per tonne at the close of trade, after dropping more than 2% in the previous session. Traded volumes stood at 54,374 lots of 25 tonnes each on Friday evening, versus the 2015 average of 44,600.
For the week, prices are up 2.1%, led by gains on Wednesday when the market posted its biggest daily rise in more than 10 months.
Tight supplies and the anticipation of good exports have driven gains, according to a trader from Kuala Lumpur.
Exports of Malaysian palm oil products jumped more than 30% month on month over Aug. 1-15, according to cargo surveyors. Intertek Testing Services is scheduled to release data for Aug. 1-20 shipments on Saturday.
Expectations of continued firm demand for exports, together with lower-than-anticipated output due to a crop-damaging El Nino last year that brings scorching heat and dry weather across Southeast Asia, helped push up palm prices by close to 10% over the past two weeks.
The El Nino weather pattern typically hurts fruit yields across top palm producers Indonesia and Malaysia, which account for nearly 90% of the global palm oil output.
Palm oil is expected to retest a resistance at RM2,651 per tonne, a break above which could lead to a gain to the next resistance at RM2,761, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related vegetable oils, the Chicago Board of Trade soybean oil December contract fell 1.3%, while the January soybean oil contract on the Dalian Commodity Exchange was also slightly down by 0.1%.
(Aug 18): Malaysian palm oil futures retreated from a 10-week high in early trade on Thursday, falling in a market correction and dragged down by a stronger ringgit.
Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange declined 2.5% to hit RM2,578 (US$646) per tonne at the end of the trading day, having touched a high of RM2,668 on Wednesday evening.
The market rose 4% on Wednesday in its strongest one-day gain in over 10 months on higher exports and tight supplies, with palm output still suffering from last year's crop damaging El Nino, which brings dry weather across Southeast Asia and lowering fruit yields.
Palm is up about 4.6% so far for the week.
Traded volumes stood at 63,719 lots of 25 tonnes each on Thursday evening, versus the 2015 average of 44,600.
"The market pulled back after it went too high, it cannot go higher than what people are willing to pay," said a trader from Kuala Lumpur.
The stronger ringgit on Thursday evening also weighed on palm, traders said, making the tropical oil more expensive for foreign currency holders. The ringgit, palm's traded currency, rose 0.4% against the dollar to 3.9925 in the evening.
Palm oil may rise to a range of RM2,761-2,897 per tonne in four weeks, according to Reuters market analyst for commodities and energy technicals Wang Tao.
In related vegetable oils, the Chicago Board of Trade soybean oil December contract fell 1.1%, while the January soybean oil contract on the Dalian Commodity Exchange was up 0.6%.
(Aug 16): Malaysian palm oil futures fell from a 10-week high on Tuesday as investors cashed in on the recent strength in prices and the ringgit rose, limiting demand for futures.
A stronger ringgit usually makes palm oil more expensive for foreign currency holders, as the ringgit is palm's traded currency.
Palm climbed to its highest since June 7 in the previous session, recording its strongest gains in nearly a year on the back of higher export demand and tracking firmer rival oils.
Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange fell 1.4% to RM2,542 (US$638) per tonne on Tuesday evening, its sharpest decline since July 8.
Traded volumes stood at 61,873 lots of 25 tonnes each at the close of trade, higher than the 2015 average of 44,600.
"It's profit taking on the back of an overbought market, and the ringgit," said a Kuala Lumpur-based trader, adding that the market may track better performing rival oils on China's Dalian Commodity Exchange.
"If its strength persists, palm will go up."
Palm's price has been influenced by the Dalian market, as they compete for a share of the global vegetable oils market. The January soybean oil contract on the Dalian Commodity Exchange was up 1.7% on Tuesday, while the January contract for RBD palm olein rose 1.8%.
In other related oils, the Chicago Board of Trade soybean oil December contract declined 0.5%.
A stronger ringgit also weighed down on palm prices, as it gained 0.6% to reach 3.9830 against the dollar around on Tuesday evening.
Palm oil may stabilise around support at RM2,543 per tonne, and then retest resistance at RM2,610, according to Reutersmarket analyst for commodities and energy technicals Wang Tao.
(Aug 17): Malaysian palm oil futures notched up their strongest gains in over 10 months, closing more than 4% higher on Wednesday, as tight supplies lent support to the market.
A stronger ringgit and a technical correction led palm to snap two consecutive days of gains in its previous session, having earlier climbed to a 10-week high tracking firmer exports and rival oils.
A stronger ringgit, palm's traded currency, usually makes the vegetable oil more expensive for foreign currency holders.
Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange rose 4.1% to RM2,643 (US$659) per tonne at the end of the trading day, charting a third session of gains in four.
It earlier reached an intraday high of RM2,668, its strongest gain since last Sept. 25 and its highest levels since June 7.
Traded volumes stood at 76,039 lots of 25 tonnes each on Tuesday evening, surpassing the 2015 average of 44,600.
The share of palm oil in India's growing edible oil imports is likely to reach a record low this marketing year as palm's price rally slashes its discount over soyoil.
"There is tightness in supply... because of the El Nino effect," said a trader based in Kuala Lumpur, adding that he expected the trend to continue for another month.
"Hopefully demand doesn't propel (prices upwards) as now soy prices are also going up."
Another trader said today's public holiday in Indonesia reduced the number of sellers in the market, adding to the existing squeeze in supply.
Palm oil output in Malaysia, the world's second-largest producer, rose 3.5% month-on-month in July to 1.59 million tonnes. Production, however, was at its weakest July level in six years due to El Nino's dry weather effects.
The weather phenomenon brings scorching heat across Southeast Asia, damaging crops and lowering palm yields in top palm producers Indonesia and Malaysia.
In related vegetable oils, the January soybean oil contract on the Dalian Commodity Exchange was up 0.5%, while the Chicago Board of Trade soybean oil December contract rose 1.7%.