Palm hits near 7-week top on stronger demand outlook
KUALA LUMPUR: Malaysian palm oil futures extended gains into a third session on Tuesday and hit a near seven-week top on expectation of stronger demand from overseas markets following the suspension of export duty.
A weaker ringgit also lent support to the market, said traders. Weakness in the ringgit, palm's currency of trade, typically makes the tropical oil cheaper for foreign buyers and spurs demand.
The Malaysian currency was 0.1 percent lower against the dollar around Tuesday noon, down from a 16-month high hit in the previous session.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was up 0.1 percent at 2,628 ringgit ($657.33) a tonne at the midday break. Earlier in the session, it rose to its strongest levels since Nov. 24 at 2,635 ringgit a tonne.
Trading volumes stood at 18,190 lots of 25 tonnes each at the midday break.
"Players are buying on better exports outlook and are still on the bullish side," said a Kuala Lumpur-based futures trader, adding that it was not easy for the market to fall amid duty-free exports.
Malaysia said on Friday it would suspend export taxes on crude palm oil for three months from Monday, in a bid to boost demand and lift prices.
Malaysian plantation company Felda Global Ventures Bhd said on Tuesday it expects a 30-50 percent increase in its palm oil export volumes to India, Pakistan, China and Europe following the suspension of export duty.
Cargo surveyors are expected to release Malaysian palm oil shipment data for the Jan. 1-10 period after 0300 GMT on Wednesday.
Palm oil may break a resistance at 2,645 ringgit per tonne, and rise more to the next resistance at 2,669 ringgit, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
In other related edible oils, the March soybean oil contract on the Chicago Board of Trade rose 0.2 percent, while the May soybean oil on the Dalian Commodity Exchange was up 0.1 percent.
The Dalian January palm oil contract gained 0.5 percent.
Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market.