MARKET DEVELOPMENT
Palm Oil Gains to One-Week High as Weak Ringgit to Boost Demand
Palm Oil Gains to One-Week High as Weak Ringgit to Boost Demand
31/07/2013 (Bloomberg) - Palm oil advanced for a second day to the highest level in a week on speculation that a slump in the ringgit to a three-year low may boost exports from Malaysia, the world’s second-biggest producer.
The contract for delivery in October climbed as much as 1.4 percent to 2,245 ringgit ($691) a metric ton on the Bursa Malaysia Derivatives, the highest price for most active futures since July 24, and was at 2,230 ringgit at 11:39 a.m. in Kuala Lumpur. Futures are headed for a 4.9 percent drop this month, the most since February, after reaching the lowest level since October 2009 on July 26.
The ringgit declined the most in three weeks to the weakest level since July 2010 after Fitch Ratings cut Malaysia’s credit outlook to negative from stable, citing rising debt levels and a lack of budgetary reform. Palm oil shipments fell 7 percent to 1.09 million tons in the first 25 days of July from the same period in June, according to surveyor Intertek. Exports were down 14 percent in the first 20 days, according to Intertek data.
“Exports are starting to improve because of the weaker ringgit,” said Han Qiang Sim, an analyst at Phillip Futures Pte. in Singapore. “When you have a weak ringgit, crude palm oil is actually deemed to be cheaper from the importer point of view. Prices are also supported by technical factors.”
Palm oil’s 14-day relative strength index was below 30 on July 29, a technical signal to some analysts that an asset’s price has fallen too fast and is poised to increase.
Soybean oil for delivery in December advanced 0.9 percent to 43.07 cents a pound on the Chicago Board of Trade. Soybeans for delivery in November rose 0.4 percent to $12.0775 a bushel.
Refined palm oil for January delivery climbed 1.8 percent to 5,444 yuan ($888) a ton on the Dalian Commodity Exchange, while soybean oil gained 1 percent to 7,048 yuan.
The contract for delivery in October climbed as much as 1.4 percent to 2,245 ringgit ($691) a metric ton on the Bursa Malaysia Derivatives, the highest price for most active futures since July 24, and was at 2,230 ringgit at 11:39 a.m. in Kuala Lumpur. Futures are headed for a 4.9 percent drop this month, the most since February, after reaching the lowest level since October 2009 on July 26.
The ringgit declined the most in three weeks to the weakest level since July 2010 after Fitch Ratings cut Malaysia’s credit outlook to negative from stable, citing rising debt levels and a lack of budgetary reform. Palm oil shipments fell 7 percent to 1.09 million tons in the first 25 days of July from the same period in June, according to surveyor Intertek. Exports were down 14 percent in the first 20 days, according to Intertek data.
“Exports are starting to improve because of the weaker ringgit,” said Han Qiang Sim, an analyst at Phillip Futures Pte. in Singapore. “When you have a weak ringgit, crude palm oil is actually deemed to be cheaper from the importer point of view. Prices are also supported by technical factors.”
Palm oil’s 14-day relative strength index was below 30 on July 29, a technical signal to some analysts that an asset’s price has fallen too fast and is poised to increase.
Soybean oil for delivery in December advanced 0.9 percent to 43.07 cents a pound on the Chicago Board of Trade. Soybeans for delivery in November rose 0.4 percent to $12.0775 a bushel.
Refined palm oil for January delivery climbed 1.8 percent to 5,444 yuan ($888) a ton on the Dalian Commodity Exchange, while soybean oil gained 1 percent to 7,048 yuan.