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MARKET DEVELOPMENT
VEGOILS-Palm Oil Ends Higher on Weak Ringgit, Slightly Better Exports
calendar21-12-2013 | linkReuters | Share This Post:

21/12/2013 (Reuters) - Malaysian palm oil futures ended higher on Friday as weakness in the ringgit continued to lend support to the palm market, while export data signalled a small recovery in demand for the tropical oil.

Monsoon floods in several palm-growing parts of Malaysia also fanned worries that output in the world's second-largest producer would fall steeply in December and potentially tighten supplies, keeping prices propped up.

Cargo surveyor data Intertek Testing Services reported that Malaysian palm oil shipments in Dec. 1-20 dropped 12 percent to 883,575 tonnes from a month ago, slightly improving from the steeper declines recorded in early December.

Another cargo surveyor Societe Generale de Surveillance showed that exports fell 9.8 percent for the same period, with shipments to China picking up from a month ago.

"Exports are not so good, but production is also not that good either. So prices are lingering at the 2,550-2,600 ringgit level," said a trader with a foreign commodities brokerage.

"At the same time, the weak ringgit is supporting the market temporarily," the trader added.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange had edged up 0.5 percent to 2,587 ringgit ($786) per tonne by Friday's close.

Total traded volume stood at 30,433 lots of 25 tonnes, just below the average 35,000 lots.

The palm market was also supported by the weak Malaysian ringgit that fell another 0.3 percent to a fresh three month low late Friday, trading at 3.2825 against the greenback.

The weaker local currency makes palm feedstock cheaper for overseas buyers, stoking demand and lifting prices to post a 1 percent gain this week.

Buyers typically cut down imports of palm oil towards the year-end as it tends to solidify in cold temperatures. Market players, however, expect Chinese buyers to re-stock edible oils ahead of China's Lunar New Year celebrations early next year.  

Malaysia's Meteorological Department on Friday terminated its "yellow stage" advisory of heavy rains over the key palm producing states of Johor and Pahang, but it had earlier warned that floods could occur over low-lying areas.

In other markets, Brent crude oil held above $110 a barrel on Friday, heading for a weekly gain, boosted by a positive outlook for fuel demand in the United States, the world's largest oil consumer, and reduced Libyan supply.

In other competing vegetable oil markets, the U.S. soyoil contract for January fell 0.1 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange lost 0.4 percent.

  Palm, soy and crude oil prices at 1007 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN4    2545   +21.00    2537    2552      73
  MY PALM OIL      FEB4    2572   +17.00    2548    2572    5136
  MY PALM OIL      MAR4    2587   +14.00    2558    2590   16704
  CHINA PALM OLEIN MAY4    6046    +0.00    6040    6094  756028
  CHINA SOYOIL     MAY4    6960   -26.00    6956    7004  609588
  CBOT SOY OIL     JAN4   39.29    -0.04   39.15   39.49    1821
  NYMEX CRUDE      FEB4   98.74    -0.30   98.65   98.94    7708

  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 = 3.29 Malaysian ringgit)