Palm extends gains on weaker ringgit, lower output expectations

Malaysian palm oil futures climbed on Wednesday for a third straight session, supported by a weaker ringgit and expectations of lower production.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was up 39 ringgit, or 0.99%, at 3,992 ringgit ($853.36) a metric ton at closing.

“Palm oil futures tracking supportive external markets and weak ringgit, coupled with expectations of production on the downtrend starting this month,” a Kuala Lumpur-based trader said.

The Malaysian ringgit – the contract currency of trade – was down 0.54% against the U.S. dollar, as of 1019 GMT. A weaker ringgit makes palm oil more attractive to foreign currency holders.

Expectations of lower output also supporting the price as the Southern Peninsular Palm Oil Millers Association data showed a 6% decline in South Peninsular mills palm oil production during the Nov. 1-20 period, said Anilkumar Bagani, commodity research head at Mumbai-based Sunvin Group.

Weak exports may cap gains though, traders said, as shipments of Malaysian palm oil products during Nov. 1-20 were estimated to be down between 2% and 9% from the previous month, data from surveyor Intertek Testing Services, Societe Generale de Surveillance and independent inspection company AmSpec Agri Malaysia showed.

European Union palm oil imports so far in the 2023/24 season, which started in July, stood at 1.32 million tons by Nov. 19, versus 1.46 million tons a year earlier.

Soyoil prices on the Chicago Board of Trade were down 0.49%. Dalian’s most active soyoil contract rose 0.02%, while its palm oil contract was up 0.88%.

Palm oil is normally affected by vegetable oil prices as they compete for a share in the global market.

Tags: exports, Production, Malaysia, palm oil, futures, ringgit, Bursa Malaysia Derivatives Exchange