Malaysian palm oil futures rose on Thursday to snap a three-session losing streak, tracking gains in other vegetable oils and as expectations of lower output in the coming weeks boosted sentiment. The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange ended 1.4 percent higher at 2,363 ringgit ($559) per tonne at the close. Traded volume stood at 41,019 lots of 25 tonnes each.
"The ringgit is weaker compared to yesterday," said a trader based in Kuala Lumpur. "There are some concerns about the weather... But the bottom line is that demand is quite bad." A weaker ringgit normally boosts demand for palm as it makes the edible oil cheaper for holders of foreign currencies.
Palm oil prices hit a three-week high this week at 2,375 ringgit, on expectations that the monsoon season in dominant Southeast Asian producers will hurt output in the coming months. Palm oil shipments in November dropped 10 percent from a month earlier, cargo surveyor data released on Monday showed. Traders are wary of high stock levels for the tropical oil, with demand currently weak and failing to make a serious dent to inventory levels.
Malaysia's palm oil stocks rose to a near 15-year high at the end of October, while inventories jumped 7.3 percent to 2.83 million tonnes, according to the latest data. "The high stockpiles will continue to put a lid on CPO prices in the near-term," Ivy Ng, an analyst with CIMB Research, said in a note. "We project near-term CPO price to trade in the range of RM2,100-2,500 per tonne."
"CPO prices will only start to move higher when there are signs of depleting palm inventories at the palm producing countries in 1Q16." On Wednesday, palm touched its lowest level since November 26 at 2,317 ringgit. In competing vegetable oil markets, the US December soyoil contract fell 0.6 percent, while the May soybean oil contract on the Dalian Commodity Exchange was little-changed.
Comments
Comments are closed.