Malaysian palm oil futures rose for a second day on Friday, tracking overnight trading of comparative oils higher, as a falling ringgit offered some support to the commodity. The benchmark palm oil contract for October on the Bursa Malaysia Derivatives Exchange closed 0.6 percent higher at 2,025 ringgit ($496.93) a tonne. "There was some initial buying on the ringgit weakness," said a trader with a commodities brokerage in Kuala Lumpur.
The Malaysian ringgit fell to a fresh 17-year low on Friday, making palm more attractive to overseas buyers as the benchmark is priced in ringgit. Traded volume stood at 63,400 lots of 25 tonnes each, well above the roughly 35,000 lots usually traded by the close of the morning session. However, weakness in global commodities, expectation of higher domestic production and slow demand are capping increases in palm prices, traders said. The benchmark climbed to as much as 2,042 ringgit a tonne earlier in the day.
"It's going to be tough for prices to remain at lofty levels with higher production and lower demand. The road ahead is slippery," the trader in Kuala Lumpur said. Palm futures lost 0.8 percent for the week, extending losses to a seventh consecutive week, after suffering big losses earlier in the week following the devaluation of the Chinese yuan. In Indonesia, the other key exporter, palm and lauric oil export fell 8 percent in July from a month earlier, an industry body said on Thursday. Among other vegetable oils, the US September soyoil contract was down 0.2 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange dipped 1.8 percent. Crude oil futures remained under pressure, plunging to 6-1/2-year lows after data revealed a big rise in US stockpiles, fuelling fears of a growing global glut.
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