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June 06, 2008
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Friday
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Jamadi-us-Sani 01, 1429
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Palm oil prices up
KUALA LUMPUR, June 5: Malaysian crude palm oil futures jumped 2.6 per cent on Thursday as vegetable oil markets rose and the ringgit weakened against the dollar.
Although news that palm oil producers would be subject to a windfall tax cast a shadow on the market, traders were encouraged by buoyant US soyaoil markets and quick technical buying after a sell-down the day before.
Palm oil used in products from soaps to biofuel is about 21.4 per cent off the record high of 4,486 ringgit a ton hit in early March. But it has gained 16 per cent so far this year.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange settled up 88 ringgit at 3,528 ringgit ($1,083) per ton, after going as high as 3,541 ringgit.
Although palm oil is still the cheapest vegetable oil, demand has been slackening somewhat.
Exports of Malaysian palm oil products for May fell 6 per cent to 1,209,475 tons from 1,286,454 tons shipped in April, cargo surveyor Intertek Testing Services said on Saturday. Another cargo surveyor, Societe Generale de Surveillance, said palm exports in May fell 3.8 per cent to 1,264,757 tons.
Oil held above $122 a barrel on Thursday, steadying after two sessions of losses that were prompted by growing concern about a slowdown in global demand.
Meanwhile, the Malaysian ringgit fell to an intra-day low 3.2660 per dollar, its weakest since mid-May on Thursday as concerns of looming inflation weighed on Asian currencies.
A weaker ringgit against the dollar makes palm oil much cheaper for overseas buyers, hopefully encouraging some demand in the cash market, traders said.
But news of a Malaysian government plan to impose a windfall tax on palm oil millers, which could affect plantation firms, such as Sime Darby and IOI Corp, has yet to fully affect the market though disappointing producers, a dealer said.
In Malaysia’s cash market, crude palm oil for June shipment in the southern region was quoted at 3,520/3,540 ringgit. Trades will be done 3,500 and 3,530 ringgit.—Reuters
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