Malaysian palm oil futures ended higher on Thursday in anticipation the ringgit will continue to retreat and on market talk the world's biggest edible oil consumer India will ramp up purchases of refined palm oil. August palm oil on the Bursa Malaysia Derivatives exchange closed up 1 percent at 2,319 ringgit ($627.60) a tonne, reversing a dip as low as 2,279 ringgit in early trade.
Total traded volume stood at 32,597 lots of 25 tonnes each, below the average 35,000 lots. "The market anticipates further weakness in the ringgit," said a trader with a local commodities brokerage in Malaysia. "There were rumours that India will further increase their buying momentum in June and July, with olein being the cheaper oil in the world's vegetable oil market," the trader added.
Palm prices in Malaysia, which set the tone for global prices, jumped to a three-month top of 2,349 ringgit per tonne on Tuesday, tracking soy markets which rallied on increased biodiesel targets in the United States, indicating demand for the edible oil would rise. The rally lost steam as soyoil prices in the United States and China eased, and as oil prices slipped nearly 3 percent overnight. Low crude oil prices dent demand for palm oil by making the latter less attractive for biofuel blending.
US July soyoil was down 0.4 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange lost 1 percent. A drop in the Malaysian ringgit helped underpin palm as it made the ringgit-priced commodity cheaper for overseas buyers. The Southeast Asian currency was down 0.3 percent after hitting a seven-week low of 3.7055 on Thursday.
Meanwhile, Indonesia's Co-ordinating Minister of Economic Affairs Sofyan Djalil told Reuters on Wednesday the top producer's crude palm oil levy may implemented by the second week of June. Senior government ministers had said the levy would be introduced in the fourth week of May.
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