Palm ends higher on weaker ringgit, clocks fifth weekly rise

KUALA LUMPUR: Malaysian palm oil futures ended higher on Friday, logging their fifth straight weekly gain, as a weaker ringgit helped erase early losses wrought by forecasts for higher production.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed up 4 ringgit, or 0.17pc, at 2,370 ringgit ($555.69) a tonne, after falling as much as 1.9pc.

The ringgit, palm's currency of trade, was 0.42pc weaker against the dollar, making the edible of cheaper for holders of foreign currency.

Palm oil gained 0.94pc this week, underpinned by expectations for robust demand this month, with the Malaysian Palm Oil Council on Thursday also forecasting a rise in third quarter exports to India, China and the European Union, after an easing of coronavirus curbs and an export duty exemption.

"Crude palm oil price is likely to be supported on the back of optimism on stronger sales of palm oil to India in the coming months. However, the boost in demand may be short-lived if there is a second wave of COVID-19," said Ivy Ng, regional head of plantations research at CIMB Investment Bank.

The Southern Peninsular Palm Oil Millers Association estimated June 1-10 production in some parts of Malaysia rose 31.7pc from the previous month, traders said.

Further weighing on the market was a decline in oil prices as the threat of a second wave of infections in the United States raised worries about demand at the world's biggest consumer of crude and fuel.

Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.

Dalian's most-active soyoil contract fell 0.46pc, while its palm oil contract slipped 1.32pc.

Soyoil prices on the Chicago Board of Trade were trading up 0.51pc.

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