KUALA LUMPUR: Malaysian palm oil futures inched up on Tuesday as the weaker ringgit made the vegetable oil cheaper to process at time when exports could start rising again ahead of an Indian festival and a national holiday in China.
Investors were also bargain hunting after commodity prices declined the previous day on concerns about the euro zone's debt crisis, boosting safe-havens such as the US dollar.
"The only reason the market is higher is because of the super-duper weak ringgit, making palm oil look cheap in relative value," said a trader in Kuala Lumpur.
"But on the flip side, the higher US dollar always results in pressure on US based commodities and that is every single vegetable oil product out there," he said.
A stronger dollar makes vegetable oil cargoes priced in that currency more expensive for overseas buyers although with India's Diwali festival late next month and China's Golden week holiday in early October, orders are expected to pour in.
Benchmark December palm oil on the Bursa Malaysia Derivatives Exchange settled up 0.9 percent to 3,067 ringgit($985.48) per tonne.
Overall volumes were light, with 16,863 lots of 25 tonnes changing hands, compared to the usual 25,000 lots.
Reuters analyst Wang Tao forecast prices to remain neutral in a range of 3,000-3,083 ringgit per tonne.
Palm oil has lost almost 20 percent so far this year on high stocks and a slowdown in demand.
Malaysia's Sept. 1-20 palm oil exports fell 16.4 percent to 978,087 tonnes from 1,170,226 tonnes shipped during Aug. 1-20, cargo surveyor Intertek Testing Services said on Tuesday.
That represents a recovery, as exports in the first ten days of September were down 36.4 percent to 377,038 tonnes from the same period a month ago.
Another surveyor, Societe Generale de Surveillance, reported a 17.4 percent fall to 967,859 tonnes in the same period.
Brent crude futures rose $1 to $110.14 a barrel, recouping from heavy losses as worries over the global economy were seen factored into current prices.
US soyoil for October delivery rose 0.8 percent on bargain hunting during Asian hours, while the most active May 2012 soybean oil contract on China's Dalian Exchange edged up 0.3 percent.
Copyright Reuters, 2011
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