Palm climbs more on weak­en­ing ring­git, traders wary

The Financial Daily - - INTERNATIONAL -

JAKARTA: Malaysian palm oil rose for a sec­ond day on Wed­nes­day, re­coup­ing some of its re­cent losses, but traders were wary and ques­tioned how far the re­cov­ery could go since de­mand re­mained weak.

"Today is a tech­ni­cal re­trace­ment," said a trader at a for­eign com­modi­ties bro­ker­age in Kuala Lumpur, adding that a weak­en­ing in the ring­git on Wed­nes­day had pro­vided sup­port.

The im­prove­ment in palm prices on Wed­nes­day was a re­ac­tion to the de­cline of more than 10 per cent seen since mid-Jan­uary, a sec­ond trader said.

"The drop was a bit on the sharp side. It was over­done," he said. "Noth­ing is go­ing on. The FOB prices are basi- cally un­changed. In the cash mar­ket there is noth­ing."

By the Wed­nes­day's close, the bench­mark April con­tract had gained 1.47 per cent to 2,207 ring­git ($ 610) per tonne, af­ter open­ing lower at 2,164 ring­git. Traded vol­ume stood at 55,607 lots of 25 tonnes, well above the typ­i­cal 35,000 lots.

De­spite that high vol­ume, de­mand for palm oil re­mained weak, traders said, partly as a re­sult of oil prices that have sub­sided around 60 per cent since mid- 2014, lim­it­ing de­mand for biodiesel.

Malaysia's Sime Darby Bhd, the world's top oil palm planter by land size, said on Wed­nes­day it had ob­tained the Euro­pean Com­mis­sion's ap­proval to buy New Britain Palm Oil Ltd for about $1.74 bil­lion.

Oil slipped to $49 a bar­rel on Wed­nes­day af­ter an in­dus­try re­port said US crude stocks rose by the most in two decades last week, and as a firmer dol­lar added to pres­sure on prices.

The US soy­oil con­tract for March fell 0.23 per cent in Asian trade. The most ac­tive May soy­bean oil con­tract on the Dalian Com­mod­ity Ex­change shed 0.5 per cent.

The Malaysian ring­git weak­ened by 0.48 per cent to 3.6165 per dol­lar and has now lost al­most 15 per cent since Septem­ber. A weaker ring­git nor­mally leads to in­creased de­mand for palm, since it makes the oil cheaper for for­eign buy­ers. - Reuters

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