Palm Climbs to Two-Week High as Ringgit Decline Boosts DemandSupunnabul Suwannakij
Palm oil rose to the highest level in more than two weeks on speculation that a weakening ringgit may bolster prospects for exports from Malaysia.
The contract for April delivery advanced 1.1 percent to 2,603 ringgit ($782) a metric ton on the Bursa Malaysia Derivatives, the highest price at close for most-active futures since Jan. 6. The gain pared losses to 2.1 percent this year.
The ringgit, which closed 0.2 percent lower at 3.3315 per dollar today, tumbled to as low as 3.3363 earlier, the weakest level since August 28 on speculation investors are favoring the dollar because of an improving outlook for the U.S. economy. The currency fell 6.7 percent in 2013 and has lost 1.7 percent this year, according to data compiled by Bloomberg.
“The weakening ringgit garnered buying interest from overseas buyers and refiners,” Tan Chee Tat, an analyst at Phillip Futures Pte in Singapore, said in an e-mailed response to questions from Bloomberg. The widening discount of palm oil to soybean oil also lured buyers, he said.
Palm oil’s discount to soybean oil widened to $58.38 a ton today from an almost three-year low of $47.25 on Jan. 3. Soybean oil for March delivery gained 0.7 percent to 38.12 cents a pound on the Chicago Board of Trade. Soybeans gained 0.2 percent to $12.815 a bushel.
Malaysia’s output may climb to a record 19.5 million tons this year because of a recovery in fresh fruit bunch yields and an increase in new matured crop area, Malaysian Palm Oil Board Director-General Choo Yuen May told a conference in Kuala Lumpur today. Output totaled 19.2 million tons in 2013.
Prices may remain “firm” in 2014 on increasing demand by major importers, palm oil’s discount to soybean and rapeseed oil prices and rising biodiesel consumption, she said.
Refined palm oil for May delivery dropped 0.3 percent to close at 5,846 yuan ($966) a ton on the Dalian Commodity Exchange. Soybean oil ended little changed at 6,660 yuan.