Palm up after six sessions of losses as global mood improves
Malaysian palm oil futures were trading higher on Thursday after six sessions of losses, tracking global equity and commodities markets and as the recent selloff brought down palm prices to an attractive level for buyers.
By the midday break, the benchmark palm oil contract for November on the Bursa Malaysia Derivatives exchange had gained 1.2 percent to 1,890 ringgit ($444.39) a tonne, on track for its biggest single-day gain since July 21.
Traded volume stood at 22,738 lots of 25 tonnes each, well above the roughly 13,500 lots usually traded by midday. "What's positive is that margins are good for local refiners," said a trader in Kuala Lumpur, adding that the recent market turmoil has widened the price gap between rival bean oil and palm oil products, making them attractive for the consumer. The palm benchmark hit its lowest since March 2009 on Tuesday, and lost 9.4 percent in the six sessions to Wednesday.
Wang Tao, a Reuters market analyst for commodities and energy technicals, said palm oil is expected to drop to 1,853 ringgit per tonne, driven by a wave v. This is the final wave of a five-wave cycle that developed from the Aug. 18 high of 2,069 ringgit. A weaker Malaysian ringgit also helped the commodity as it makes palm cheaper for offshore buyers. The ringgit has been emerging Asia's worst performing currency, losing 17 percent so far this year, on weakness in global currencies and domestic politic woes. In comparative vegetable oils, the US September soyoil contract was 1 percent higher in early Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange was down 0.1 percent.