Palm oil prices post big­gest gains in 5 weeks

The Sun (Malaysia) - - SUNBIZ -

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

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