KUALA LUMPUR: Malaysian palm oil futures gained 1.6 per cent to reach a two-year high on Thursday, underpinned by a weaker ringgit and prospects of tighter supplies next year.
A weaker ringgit, palm’s currency of trade, usually makes the edible oil cheaper for foreign buyers. The ringgit was down 0.2pc against the dollar.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange settled up 43 ringgit, or 1.6pc at 2,816 ringgit ($675.30) a tonne.
It gained for a third consecutive session.
Palm prices were also supported by overnight gains in edible oils at the Dalian Commodities Exchange, Chicago Board of Trade and Asia Pacific Exchange, said Marcello Cultrera, dealer and institutional manager at Phillip Futures in Kuala Lumpur.
Total palm oil production in Indonesia and Malaysia is expected be flat next year, due to dry weather and low fertiliser application in the world’s top two producers of the vegetable oil, a leading analyst Dorab Mistry said last month.
“The Chinese New Year seasonal palm subscriptions are now the main concern as the palm oil prices by rising 30pc since September could lead to demand rationing,” Cultrera said. Dalian’s most-active soyoil contract and palm oil both finished 0.9pc higher. Soyoil prices on the Chicago Board of Trade were also trading 0.9pc firmer.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may rise to 2,818 ringgit per tonne, as it has cleared a resistance at 2,760 ringgit, said Wang Tao, Reuters technical analyst.
Published in Dawn, December 6th, 2019