Malaysian palm oil futures closed higher on Tuesday as the ringgit weakened further, but remain within their recent range after dipping late last month from a 15-month high. The benchmark December palm oil contract on the Bursa Malaysia Derivatives Exchange gained 2 percent at the end of the trading day to 2,320 ringgit ($544.60) a tonne.
"The market is going to be erratic with no clear direction for the next one to two weeks," said a trader based in Kuala Lumpur. "It will remain uncertain until the ringgit factor comes in, export figures show demand is there, and production shows it is coming down." The trader had forecast a trading range of 2,250 to 2,350 ringgit for palm. Traded volume stood at 54,270 lots of 25 tonnes each, well above the average 35,000 lots usually traded in a day.
A weaker ringgit usually supports palm oil by making it cheaper for holders of other currencies. The ringgit continued to fall against the dollar on Tuesday, losing 1.3 percent as domestic politics undermined market confidence ahead of a national budget announcement. Export data from a cargo surveyor showed a near 13 percent drop in Malaysian exports for the first 20 days of October against the same time period in the previous month. In competing vegetable oil markets, US December soyoil gained 0.4 percent and the January soybean oil contract on the Dalian Commodity Exchange fell 1.4 percent.
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