KUALA LUMPUR: Malaysian palm oil futures rose for a second consecutive session on Thursday, but traded in a tight range, as traders weighed weak ringgit-led demand prospects against rising inventories.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange gained 12 ringgit, or 0.32%, to 3,748 ringgit ($799.49) a tonne by the midday break.
The ringgit, palm’s currency of trade, fell 0.17% against the dollar, making the commodity cheaper for holders of foreign currency.
“The ringgit continued to depreciate to a fresh 24-year low following three successive months of U.S interest rate hikes, but lower ringgit alone is not sufficient to entice prospect of higher exports,” Sathia Varqa, co-founder of Palm Oil Analytics (POA) said in a conference in Malaysia’s Sabah state.
Rising supply and escalating negative macro factors, including rising inflation and interest rates, are depressing prices, Varqa added. Palm oil prices will remain volatile, Varqa said, adding that the contract will trend 3,700-4,000 ringgit in October to November, before declining further.
Palm oil may test support at 3,652 ringgit
LMC International, meanwhile, said palm oil prices will continue to decline to around 3,200 ringgit in the first quarter of 2023, and remain below 3,500 ringgit into the second half of that year as stocks build due to stiffer competition in larger rival Indonesia.
Dalian’s most-active soyoil contract rose 1.8%, while its palm oil contract gained 0.3%.
Soyoil prices on the Chicago Board of Trade were fell 0.2%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may test a support at 3,652 ringgit per tonne, a break below which could open the way towards 3,570 ringgit, Reuters technical analyst Wang Tao said.
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