KUALA LUMPUR: Malaysian palm oil futures ended nearly 1 percent higher on Friday, recording a fifth consecutive session of gains due to persistent weakness in the ringgit and falling output.
The contract climbed 5.7 percent this week, after a 3.53 decline in the previous week.
A weaker ringgit typically makes palm oil cheaper, and thus more attractive for foreign buyers. The tropical oil hit a four-year high on Thursday.
The Malaysian currency fell as much as 0.18 percent to 4.453 against the dollar, almost matching the record low of 4.456 hit on Sept. 29, 2015. The ringgit has shed nearly 6 percent since Donald Trump's victory in the US presidential election on Nov. 8, making it Asia's worst performing currency.
Palm output from Indonesia and Malaysia are expected to fall by 10-15 percent and 9.8 percent, respectively, this year.
Lower palm oil output well into early next year, a lack of availability of rival soybean oil and increased use of biodiesel are likely to buoy prices of the palm contract, analysts told Reuters at an industry conference in Bali.
Leading industry analyst Dorab Mistry told the same conference on Friday that palm oil prices could rise 10 percent from current levels by the first quarter of 2017, before declining again as stockpiles recover.
Benchmark palm oil futures for February delivery on the Bursa Malaysia Derivatives Exchange were up 0.9 percent at 3,031 ringgit ($680.66) a tonne at Friday's close.
Traded volumes stood at 38,445 lots of 25 tonnes each.
Palm oil futures were still riding on the weakness in the ringgit and expectations of lower output, said a trader based in Kuala Lumpur.
"The external markets have also been firm, with Dalian first tracking CBOT's Wednesday rally, which the palm market then followed," the trader added.
CBOT soyoil futures surged nearly 7 percent on Wednesday after the US government released final requirements for biofuel use in 2017.
In related vegetable oils, the January soybean oil contract on the Dalian Commodity Exchange rose 1.94 percent, while the January contract for palm olein on the Dalian Commodity Exchange was up 0.22 percent.
There was no trade in CBOT soyoil futures due to Thanksgiving holidays.
Comments
Comments are closed for this article.