JAKARTA: Malaysian palm oil futures were unchanged on Tuesday after rising earlier in the day on bargain buying, but firmer currency and expectations of improving production pressured the price.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange closed at 3,785 ringgit ($846.76) a tonne on Tuesday after rising 1.82% earlier in the day. The contract fell for three straight sessions to its lowest closing in nearly seven weeks the previous day.
“Firmer ringgit, lack of follow trough buying and gradual improvement in production as flooding subside capped gains,” a Kuala Lumpur-based trader said, adding that higher crude oil prices lend support to the contract.
The Malaysian ringgit, the contract currency of trade, rose 0.29% on Tuesday. A stronger ringgit makes palm oil more expensive for foreign currency holders.
Palm oil drops to over six-week low
Market participants were also waiting for the U.S. Federal Reserve’s decision on its benchmark overnight interest rate on Wednesday, as investors remain on edge in the midst of global banking strains, the trader said.
Exports of Malaysian palm oil products for March 1-20 rose between 19.8% and 29.8% from a month earlier, data from cargo surveyor Intertek Testing Services and independent inspection company AmSpec Agri Malaysia showed.
Indonesia’s palm oil production for 2023/24 is seen at 46 million metric tonnes (MMT), an increase of 3% from the previous year, the U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service report said.
Oil rose on Tuesday, extending a recovery from a 15-month low hit the previous day, as the rescue of Credit Suisse eased worries about global banking sector risks that could hit economic growth and fuel demand. Stronger crude oil price makes palm oil more attractive for biodiesel feedstock.
Dalian’s most active soyoil contract slid 0.59%, while its palm oil contract dropped 1.32%. Soyoil prices on the Chicago Board of Trade were down 0.14%.
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