Palm oil prices post biggest gains in 5 weeks
KUALA LUMPUR: Malaysian palm oil futures made their biggest gains in over five weeks yesterday evening, lifted by lower output expectations and tracking a weaker ringgit.
A weaker ringgit, palm’s traded currency, usually makes the tropical oil cheaper for foreign currency holders. It fell 0.5% to 4.1700 per dollar in the evening, after hitting its lowest levels since March 1 at 4.1760.
Benchmark palm oil futures for December on the Bursa Malaysia Derivatives Exchange rose 2.7% to RM2,611 a tonne at the close of trade, its strongest daily gain since a 3% jump on Sept 2.
Palm fell during the previous two sessions on bearish data from industry regulator the Malaysian Palm Oil Board.
End-stocks for September rose 5.7% to 1.55 million tonnes, surpassing market expectations while exports declined 20.4% to 1.77 million tonnes, government data on Monday showed.
Traded volumes stood at 51,583 lots of 25 tonnes each yesterday evening, higher than the 2015 daily average of 44,600 lots.
A futures trader from Kuala Lumpur said the gain was partly due to a weaker ringgit, and also due to market expectations of negative production growth in October.
Palm oil output growth is expected to decline this year due to the lingering effects of a crop damaging El Nino weather event. It brings dry weather across Southeast Asia, impacting yields and lowering output.
Production in Malaysia, the world’s second largest palm producer, rose 0.8% in September from a month ago, data from an industry regulator showed on Monday. – Reuters