Palm extends gains on weaker ringgit

• Palm prices have risen steeply over the past two months to trade at two-year highs.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
• Soyoil prices on the Chicago Board of Trade were 0.3pc higher.

KUALA LUMPUR: Malaysian palm oil futures extended gains into a second session on Wednesday despite some profit taking, as a weaker ringgit supported prices.

The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed to trade at 0.9pc higher to 2,771 ringgit ($664.51) a tonne.

Palm prices have risen steeply over the past two months to trade at two-year highs, boosted by a push to increase the use of palm oil in biodiesel in Malaysia and Indonesia and expectations of a supply shortage.

"Prices opened higher but came off on profit-taking early in the session," a Kuala Lumpur-based trader told Reuters. Firm spot cash prices helped push futures higher later in the session, he added.

A second Kuala Lumpur-based trader said the gains were driven by "supportive external markets led by the Dalian Commodities Exchange and a weak ringgit".

A weaker ringgit, palm's currency of trade, usually makes the edible oil cheaper for foreign buyers. The ringgit was down 0.1pc against the dollar, after falling 0.2pc in the previous session.

Dalian's January soyoil contract traded 0.6pc higher, while its palm oil contract jumped 1.7pc.

Soyoil prices on the Chicago Board of Trade were 0.3pc higher.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.