Palm oil extends gains on demand hopes, weak Malaysian ringgit

Malaysian palm oil futures extended gains on Friday due to the weakness of the Malaysian ringgit and expectations of improved demand after the prices of rival soft oils rallied more than palm oil this week.

The benchmark palm oil contract FCPOc3 for August delivery on the Bursa Malaysia Derivatives Exchange was up 21 ringgit, or 0.54%, at 3,915 ringgit ($829.98) a metric ton by mid-day break.

“Until a few weeks ago, palm oil was losing market share due to its premium over soyoil and sunflower oil,” said a New Delhi-based trader.

“It has started regaining market share now that it is available at a discount to rival oils.”

Soyoil, sunflower oil and rapeseed oil prices jumped this week on production concerns, he said.

U.S. soybean oil futures BOc2 were up 0.2% on Friday morning.

Soybean farmers in Brazil’s southernmost state, where rain and flooding have disrupted field work for weeks, have now harvested 91% of their soy area, up from 85% last week, crop agency Emater said on Thursday.

Malaysian ringgit depreciated significantly this week, which is also helping exporters to increase prices, said a Kuala Lumpur-basedtrader.

“Exports would improve in coming weeks from Malaysia and Indonesia,” the trader said.

The Malaysian ringgit MYR=, palm’s currency of trade, weakened 0.32% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.

Malaysian palm oil exports for May 1-20 fell between 8.3% and 9.6% from the month before, according to cargo surveyors.

Tags: soyoil, palm oil, futures, demand, benchmark contract, sunflower oil, prices, Malaysia