MARKET DEVELOPMENT
VEGOILS-Weak Ringgit, China Data Lift Palm To More Than 1-Month High
VEGOILS-Weak Ringgit, China Data Lift Palm To More Than 1-Month High
23/08/2013 (Reuters) - Palm oil futures rose to their highest level in more than a month on Thursday after poor Malaysian economic data weakened the ringgit and a surprise surge in China's manufacturing sector fuelled demand hopes from the world's No.2 palm oil buyer.
The ringgit dived to its lowest in more than three years on Thursday as investors turned skittish after Malaysia reported disappointing growth in its second quarter and revealed a shrinking current account surplus.
But the weak local currency makes the tropical oil cheaper for overseas buyers and refiners and could further boost exports which climbed between 10-12 percent in the first 20 days of August compared to a month ago.
"The currency is one of the supportive factors for palm oil and it is holding prices above 2,300 ringgit," said a trader with a foreign commodities brokerage.
"As the ringgit weakens, domestic prices of palm becomes cheaper and this will encourage exports," the Kuala Lumpur-based trader added.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange climbed to 2,362 ringgit ($713) per tonne in the afternoon session, a level unseen since July 1. Prices then settled at 2,356 ringgit by Thursday's close, notching a 0.9 percent gain.
Total traded volume stood at 39,820 lots of 25 tonnes each, higher than the usual 35,000 lots.
Technicals showed palm oil still looks neutral in a range of 2,287-2,366 ringgit per tonne, and only an escape could point to a future direction, said Reuters market analyst Wang Tao.
Activity in China's manufacturing sector hit a 4-month high in August, a preliminary survey showed, reinforcing signs of an economic pick-up which would stoke edible oil demand as buyers re-stock ahead of the Mid-Autumn festival.
"China, the second-largest buyer of palm oil, is likely to boost palm oil demand with stronger economic data," said Phillip Futures investment analyst Sim Han Qiang in a note on Thursday.
In other markets, Brent crude oil rose towards $110 a barrel on Thursday as upbeat data from Europe and China kindled hopes for better demand from two of the world's largest energy consuming regions, and as oil exports from Libya stayed limited by strikes and unrest.
In vegetable oil markets, the U.S. soyoil contract for December edged up 0.2 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.6 percent.
Palm, soy and crude oil prices at 1008 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2402 +9.00 2380 2404 474
MY PALM OIL OCT3 2368 +17.00 2334 2374 6006
CHINA PALM OLEIN JAN4 5524 -18.00 5490 5564 349752
CHINA SOYOIL JAN4 7096 -42.00 7064 7148 706840
CBOT SOY OIL DEC3 43.24 +0.07 42.92 43.30 8407
NYMEX CRUDE OCT3 104.36 +0.51 103.53 104.72 19844
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.312 Malaysian ringgit)
The ringgit dived to its lowest in more than three years on Thursday as investors turned skittish after Malaysia reported disappointing growth in its second quarter and revealed a shrinking current account surplus.
But the weak local currency makes the tropical oil cheaper for overseas buyers and refiners and could further boost exports which climbed between 10-12 percent in the first 20 days of August compared to a month ago.
"The currency is one of the supportive factors for palm oil and it is holding prices above 2,300 ringgit," said a trader with a foreign commodities brokerage.
"As the ringgit weakens, domestic prices of palm becomes cheaper and this will encourage exports," the Kuala Lumpur-based trader added.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange climbed to 2,362 ringgit ($713) per tonne in the afternoon session, a level unseen since July 1. Prices then settled at 2,356 ringgit by Thursday's close, notching a 0.9 percent gain.
Total traded volume stood at 39,820 lots of 25 tonnes each, higher than the usual 35,000 lots.
Technicals showed palm oil still looks neutral in a range of 2,287-2,366 ringgit per tonne, and only an escape could point to a future direction, said Reuters market analyst Wang Tao.
Activity in China's manufacturing sector hit a 4-month high in August, a preliminary survey showed, reinforcing signs of an economic pick-up which would stoke edible oil demand as buyers re-stock ahead of the Mid-Autumn festival.
"China, the second-largest buyer of palm oil, is likely to boost palm oil demand with stronger economic data," said Phillip Futures investment analyst Sim Han Qiang in a note on Thursday.
In other markets, Brent crude oil rose towards $110 a barrel on Thursday as upbeat data from Europe and China kindled hopes for better demand from two of the world's largest energy consuming regions, and as oil exports from Libya stayed limited by strikes and unrest.
In vegetable oil markets, the U.S. soyoil contract for December edged up 0.2 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.6 percent.
Palm, soy and crude oil prices at 1008 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2402 +9.00 2380 2404 474
MY PALM OIL OCT3 2368 +17.00 2334 2374 6006
CHINA PALM OLEIN JAN4 5524 -18.00 5490 5564 349752
CHINA SOYOIL JAN4 7096 -42.00 7064 7148 706840
CBOT SOY OIL DEC3 43.24 +0.07 42.92 43.30 8407
NYMEX CRUDE OCT3 104.36 +0.51 103.53 104.72 19844
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.312 Malaysian ringgit)