(May 24): Malaysian palm oil futures recovered from the previous session's near three-month low on Tuesday, supported by a weaker ringgit while gains in
rival oils also boosted sentiment.
rival oils also boosted sentiment.
The contract for August delivery on the Bursa Malaysia Derivatives Exchange had risen 0.4% to 2,503 ringgit (US$608) per tonne at the end of the trading day. It hit its lowest level since March 3 on Monday, dragged down by losses in Chinese vegetable oils.
Traded volume stood at 30,536 lots of 25 tonnes each on Tuesday evening, lower than the 2015 daily average of 44,600.
"The U.S. dollar has strengthened, and markets have recovered a bit on the Dalian," said a trader from Kuala Lumpur, referring to the Dalian Commodity Exchange.
"Nearby tightness on supply also created some buying."
The ringgit lost as much as 1.1% to 4.1290 per dollar, its weakest since March 16, as most Malaysian government bond prices slipped. The currency was down 0.9% at 4.1200 per dollar in the evening, making palm oil cheaper for holders of foreign currencies.
Better performing rival oils on the Dalian Commodity Exchange also boosted prices of Malaysian palm. The most actively traded September contract for palm olein gained 0.4%, while the September soybean oil contract rose 0.3%.
Expectations of lower output in May and early June, due to the impact from a crop-damaging El Nino weather event, also lent support to palm, said the Kuala Lumpur-based trader.
The Australian Bureau of Meteorology said that the strongest El Nino in nearly 20 years that persisted through 2016 is now over.
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