Palm rises to 7-week top on stronger soyoil, weaker ringgit
KUALA LUMPUR (May 24): Malaysian palm oil futures rose to a seven-week high in early trade on Thursday, tracking gains in U.S. soyoil and supported by a weaker ringgit.
Palm oil prices typically rise on a weaker ringgit, its currency of trade, as it makes the edible oil cheaper for foreign buyers. The ringgit weakened 0.1% to 3.9850 against the dollar at midday break on Thursday.
The palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was up 0.6% at 2,487 ringgit (US$624.09) a tonne at midday break.
It earlier climbed to 2,496 ringgit, its highest level since April 9. Palm is also up 1.5% for the week so far, in line for a third straight week of gains.
Trading volume stood at 17,985 lots of 25 tonnes each at midday break.
"The market is up on soybean oil's upside, while crude oil prices are also still holding at high levels," said a futures trader in Kuala Lumpur, referring to soyoil on the U.S. Chicago Board of Trade.
"The ringgit is also weaker and is expected to further weaken over the week on the dollar's strength."
Palm has been tracking movements in crude oil prices in recent sessions, as the vegetable oil is used for feedstock to produce biodiesel.
While oil prices edged down on Thursday on the back of higher OPEC production, benchmark Brent futures are still trading at over three-year highs at US$79.
Palm oil is impacted by movements in rival edible oils, as they compete for a share in the global vegetable oils market.
The Chicago July soybean oil contract gained 0.6% on Wednesday, and was last slightly up 0.1% on Thursday.
In other related oils, the September soybean oil on China's Dalian Commodity Exchange was up 0.2%, while the Dalian September palm oil contract rose 0.4%.
Palm, soy and crude oil prices, as of 0440 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN8 2478 +16.00 2473 2481 103
MY PALM OIL JUL8 2480 +15.00 2478 2488 2621
MY PALM OIL AUG8 2487 +14.00 2484 2496 6200
CHINA PALM OLEIN SEP8 5180 +22.00 5128 5196 266608
CHINA SOYOIL SEP8 5822 +14.00 5772 5840 384718
CBOT SOY OIL JUL8 31.73 +0.03 31.6 31.79 2752
INDIA PALM OIL MAY8 670.20 +1.70 669.20 670.3 16
INDIA SOYOIL JUN8 0 +0.00 0 0 0
NYMEX CRUDE JUL8 71.64 -0.20 71.61 72.00 24157
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
(US$1 = 3.9850 ringgit)
(US$1 = 68.3150 Indian rupees)
(US$1 = 6.3910 Chinese yuan)
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