Palm futures at 2-year high on weaker ringgit, supply concerns

• Palm prices were also supported by overnight gains in edible oils at the Dalian Commodities Exchange.
• Soyoil prices on the Chicago Board of Trade were trading 0.2pc firmer.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

KUALA LUMPUR: Malaysian palm oil futures hit their highest in more than two years, up for a third consecutive session on Thursday, supported by a weaker ringgit and prospects of tight supply next year.

A weaker ringgit, palm's currency of trade, usually makes the edible oil cheaper for foreign buyers. The ringgit was down 0.1pc against the dollar.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange rose 0.4pc to 2,783 ringgit ($667.63) a tonne, its highest since November 2017. In the previous session, the contract closed nearly 1pc firmer.

FUNDAMENTALS

Palm prices were also supported by overnight gains in edible oils at the Dalian Commodities Exchange, Chicago Board of Trade and Asia Pacific Exchange, said Marcello Cultrera, dealer and institutional manager at Phillip Futures in Kuala Lumpur.

Total palm oil production in Indonesia and Malaysia is expected be flat next year, due to dry weather and low fertiliser application in the world's top two producers of the vegetable oil, a leading analyst Dorab Mistry said last month.

"The Chinese New Year seasonal palm subscriptions are now the main concern as the palm oil prices by rising 30pc since September could lead to demand rationing," Cultrera said.

Dalian's most-active soyoil contract traded 0.6pc higher, while its palm oil contract added 0.4pc.

Soyoil prices on the Chicago Board of Trade were trading 0.2pc firmer.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may rise to 2,818 ringgit per tonne, as it has cleared a resistance at 2,760 ringgit, said Reuters technical analyst Wang Tao.

MARKET NEWS

Asian stocks edged up on Thursday on signs the United States and China were on track for a preliminary trade deal, though optimism was tempered by the almost daily shifts in prospects for defusing the damaging tariff war now in its second year.