Palm oil futures rose on Thursday, influenced by the weakening of the Malaysian ringgit and anticipated improved demand as the tropical oil began trading at a discount compared to rival soft oils.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange increased by 24 ringgit, or 0.62%, closing at 3,892 ringgit ($827.73) per metric ton.
A trader based in Mumbai noted that the decline in the Malaysian ringgit and a rise in US soyoil futures bolstered the market. The Malaysian ringgit, the currency used for trading palm oil, weakened by 0.26% against the dollar.
A weaker ringgit makes palm oil more attractive to holders of foreign currencies. On Thursday morning, US soybean oil futures rose by 0.43%. “Palm oil exports had been declining as it was more expensive for buyers than soyoil and sunflower oil. However, with palm oil now trading at a discount, exports are likely to increase,” the trader explained. According to cargo surveyors, Malaysian palm oil exports fell between 8.3% and 9.6% from the previous month for the period of May 1-20.
A trader based in Kuala Lumpur mentioned that Malaysia’s palm oil production is gaining momentum, necessitating an acceleration in exports to prevent further stock accumulation.
The industry regulator reported earlier this month that Malaysia’s palm oil stocks rose at the end of April for the first time in six months, as production increased despite a decline in exports. According to Reuters’ technical analyst Wang Tao, palm oil prices may fall into a range of 3,812-3,832 ringgit per metric ton, as the initial rebound from 3,767 ringgit has concluded.
Dekel Agri-Vision PLC (LON:DKL) aspires to become a leading agro-industrial company in West Africa, one that creates value for shareholders whilst at all times placing the interests of the local communities and environment in which it operates in at the heart of its operations.
