JAKARTA: Malaysian palm oil futures shed losses and closed higher on Thursday, after seven straight sessions of decline and hitting their lowest since September, supported by strong buying activities from major consumers, mainly India and China.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange gained 73 ringgit, or 1.96%, to 3,801 ringgit ($888.71) a metric ton at the close. “The futures opened lower but quickly found some floor on the back of Indian buying and short covering after a significant decline in recent times,” said Anilkumar Bagani, research head of Mumbai-based vegetable oil broker Sunvin Group.
India was actively buying crude palm oil, while China was making purchases of refined, bleached and deodorized (RBD) palm olein this week for delivery in May to September, said a New Delhi-based dealer with a global trade house.
Stock levels in both India and China are lower than normal, and the price correction offers an opportunity to build them up at a lower level, the dealer said.
Dalian’s most-active soyoil contract fell 0.13%, while its palm oil contract shed 0.2%. Soyoil prices on the Chicago Board of Trade were up 1.01%. Palm oil tracks price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Malaysian palm oil futures are likely to extend their decline and trade near a two-year low of 3,500 ringgit from June to November as recovery in production leads to a stock build, industry analyst Dorab Mistry said on Wednesday.
Oil prices held steady on Thursday, supported by hopes of a breakthrough in looming trade talks between the US and China, the world’s two largest oil consumers.
The ringgit, palm’s currency of trade, weakened 0.99% against the US dollar, making the commodity cheaper for buyers holding foreign currencies.
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