Malaysian palm oil futures extended gains on Friday to reach its strongest level in nearly two years, tracking competing vegetable oils and a weaker ringgit. The palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange rose 1.6 percent at 2,639 ringgit per tonne after hitting an intraday high of 2,642 ringgit, its highest since April 30, 2014.
Traded volume stood at 52,046 lots of 25 tonnes each. "Palm rose in unison with overnight gains in rival soyoil and short-covering," said a trader based in Kuala Lumpur. "Traders were betting on a stronger ringgit, however it is weakening, thus the short-covering." The ringgit lost 0.7 percent in evening trade on Friday as Asian shares slipped, reaching 4.1670 against the dollar.
A weaker ringgit, the currency palm is traded in, makes the tropical oil cheaper for holders of foreign currencies. Palm oil is expected to climb to 2,672 ringgit per tonne, as it has cleared a resistance at 2,585 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao. In competing vegetable oil markets, the US March soyoil contract gained 0.4 percent.
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