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VEGOILS-Palm supported by weaker ringgit, rising demand outlook - Reuters News

19-Mar-2018 01:12:25 PM

• Palm hits one-week low of 2,407 rgt/T
• Softer gains in U.S. soyoil capping palm's gains - Trader

By Emily Chow

KUALA LUMPUR, March 19 (Reuters) - Malaysian palm oil futures edged up in early trade on Monday supported by weakness in the ringgit, its currency of trade, and as traders were bullish about prospects of improving demand.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange rose 0.4 percent to 2,425 ringgit ($620.05) a tonne at the midday break, after falling to a one-week low of 2,407 ringgit earlier in the session.

Trading volumes stood at 22,858 lots of 25 tonnes each at noon on Monday.

"The market is supported in anticipation of better exports... But lower soyoil seems to be checking palm's upside," said a Kuala Lumpur-based trader, referring to soyoil on the U.S. Chicago Board of Trade.

Another trader in Kuala Lumpur added that a slightly weaker ringgit also added to palm's gains, as this makes the edible oil cheaper for holders of foreign currencies.

The ringgit slipped 0.1 percent to 3.9110 against the dollar on Monday afternoon.

Palm oil exports from Malaysia, the world's second largest producer, weakened 2-5 percent in the first half of March versus the corresponding period in February, according to shipment data.

Demand is expected to pick up from regions such as the Middle East, as buyers stock up ahead of Ramadan which begins in mid-May this year.

The Muslim holy month sees devotees break day-long fasts with communal feasting, which incurs higher usage of palm oil for cooking purposes. Buyers usually start increasing purchases of palm oil one to two months ahead of the festivities.

In other related oils, the Chicago Board of Trade's May soybean oil contract rose 0.1 percent, while the May soybean oil on China's Dalian Commodity Exchange fell 0.4 percent.

The Dalian May palm oil contract was also down 0.4 percent.

Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market.