Palm oil futures in Malaysia recovered from a more than three-year low on Wednesday, helped by a weaker ringgit but soft demand and high inventory levels kept a lid on prices. Palm touched its lowest since August 2015 on Tuesday, falling 4.4 percent over three consecutive sessions.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rebounded by 2.4 percent to 2,014 ringgit ($479.75) per tonne by closing time on Wednesday. Traded volumes stood at 45,569 lots of 25 tonnes each by midday.
Palm prices has dropped "too much, too fast", a Kuala Lumpur-based trader said. "The ringgit is weaker, so it is providing some support."
Palm futures are traded in ringgit and any weakness in the currency makes them cheaper for holders of other currencies.
The ringgit edged lower for a second day on Wednesday, hitting its lowest in more than a year against the dollar.
But the trader said palm was likely to struggle to maintain positive momentum, given high inventory levels in Malaysia due to high production and weak demand.
"The market needs to see real demand before we can expect recovery in prices," the trader said, adding high inventory levels would continue to hold back prices in short term.
Malaysia's largest palm oil producer FGV Holdings Bhd said on Wednesday the subdued palm price was like to continue into next year, forecasting palm would trade in a range of 1,900 ringgit to 2,100 ringgit per tonne in 2019.
In related oils, the Chicago soyabean oil contract for December rose 0.9 percent, while the January soyabean oil contract on the Dalian Commodity Exchange traded 0.2 percent lower.
The Dalian January palm oil contract was nearly 1 percent higher. Palm oil prices are affected by movements in other edible oils as they compete for a share of the global vegetable oils market.
Comments
Comments are closed for this article.