Malaysian palm oil rose on Thursday for a third day in a row, boosted by a weaker ringgit and tracking other vegetable oils. The January benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed 1.2 percent higher at 2,369 ringgit ($551.76) a tonne. Its uptrend however has been range-bound due to conflicting market fundamentals.
"Today's market is higher as the ringgit went to 4.30 (against the dollar), US CPOT soyoil and Dalian RBT palm olein were also up," said a trader in Kuala Lumpur. "There are plus and minus factors on supply and demand, the market is on a conflicting movement and moving on a tight range." Traded volume stood at 49,147 lots of 25 tonnes each, above the average 35,000 lots usually traded in a day.
A weaker ringgit lends some support to palm prices, as it makes the vegetable oil cheaper for overseas buyers holding other currencies. It lost 0.7 percent against the dollar on Thursday, reaching an intraday high of 4.300. Traders are holding bearish views for palm's demand, as exports to top consumers India and China are expected to drop. However the El Nino weather phenomenon, which sees scorching weather across Asia, could reduce palm production and boost palm prices.
Palm oil faces resistance at 2,373 ringgit per tonne, and may retrace to a support at 2,319 ringgit, according to Wang Tao, a Reuters market analyst for commodities and energy technicals. In other vegetable oil markets, the US December soyoil contract rose 0.5 percent and the January soybean oil contract on the Dalian Commodity Exchange gained slightly by 0.04 percent.
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