Malaysian palm oil futures rose on Monday, marking their first gain in three sessions on the back of a weaker ringgit. The January benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange had risen 2.7 percent to 2,384 ringgit ($545.85) a tonne at the end of the trading day. The market traded higher probably due to the weakness of the ringgit, according to a Kuala Lumpur-based trader.
"Technically the market wanted to push up, I think there's some speculative buying which triggered technical buying." A weaker ringgit, the currency palm is traded in, usually lends some support to palm prices, making the vegetable oil cheaper for foreign buyers. The ringgit weakened 1.4 percent to 4.3675 against the firming dollar on Monday, after strong US employment data fuelled speculation of an interest rate hike before the year-end.
News of Indonesia's 1.86 million kilolitre biodiesel allocation from November 2015 to April 2016 could also have boosted palm prices, traders said. Indonesia will also raise the minimum bio content in diesel fuel for transport to 20 percent in 2016 from 15 percent this year. Palm rose more than 2 percent last Thursday after top producer Indonesia announced the names of companies that have won quotas to supply biodiesel to state-owned energy firm Pertamina.
Palm oil is used for blending into biodiesel, creating demand for the vegetable oil and supporting its prices. Traded volume stood at 31,688 lots of 25 tonnes each, below the average 35,000 lots usually traded in a day. In competing vegetable oil markets, the US December soyoil contract rose 0.8 percent, while the January soybean oil contract on the Dalian Commodity Exchange dropped 0.3 percent.