Palm rises on weaker Malaysian ringgit, demand hopes

Malaysian palm oil futures rose on Thursday due to weakness in the Malaysian ringgit and expectations of improved demand as the tropical oil started trading at a discount to rival soft oils.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed up 24 ringgit, or 0.62%, at 3,892 ringgit ($827.73) a metric ton.

The drop in the Malaysian ringgit and a rise U.S. soyoil futures provided support to the market, said a Mumbai-based trader.

The Malaysian ringgit, palm’s currency of trade, weakened 0.26% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.

U.S. soybean oil futures were up 0.43% on Thursday morning.

“Palm oil exports had been falling since the oil was more expensive for buyers than soyoil and sunflower oil. However, now that it is trading at a discount, exports are likely to pick up,” the trader said.

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

Malaysia’s palm oil production is gaining momentum and there is a need to accelerate exports to avoid a further buildup in stocks, said a Kuala Lumpur-based trader.

Malaysia’s palm oil stocks increased at the end of April for the first time in six months as production jumped despite a drop in exports, the industry regulator said earlier this month.

Tags: benchmark contract, sunflower oil, exports, Production, Malaysia, soyoil, palm oil, stocks, futures