Malaysian palm oil futures hit a near three-week high on Monday after a drop in early trade helped by exports and a weaker ringgit. The benchmark November contract on the Bursa Malaysia Derivatives exchange closed higher at 2,048 ringgit ($473.25) a tonne, up 0.8 percent from yesterday's closing price. It hit a session high at 2,054 ringgit.
Traded volume at 40,536 lots of 25 tonnes each topped a daily average of 35,000 lots. "There's been good vessel loading activity in Pasir Gudang, which would mean higher exports," said a trader with a foreign commodities firm based in Kuala Lumpur. The port in the southern state of Johor produces the most palm oil in Peninsular Malaysia. "However, the market today got influenced more by the weakening ringgit than any other fundamental factors."
A weak ringgit usually supports palm oil prices. It weakened 1.7 percent against the dollar in intraday trading on Monday, reaching a new year-to-date high to close at 4.3275. Technical charts show palm oil is expected to fall to 1,963 ringgit per tonne, as it has broken support at 2,024, Reuters market analyst for commodities and energy technicals Wang Tao said.
In competing vegetable oil markets, the most active January soybean oil contract on the Dalian Commodity Exchange was down 0.7 percent, while Dalian palmoil for January was down 1.2 percent. The US December soyoil contract was last up 0.3 percent. Oil prices fell on Monday due to weakening Chinese equities, a stronger dollar and fears of global oversupply. Palm oil often takes price direction from crude oil, as vegetable oils are increasingly used in making renewable fuels.
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