Malaysian palm oil futures surged for a sixth day in a row to new 15-month highs on
Tuesday, bolstered by bullish analyst forecasts, a weakening ringgit and expectations recent dry weather and haze will curb crop output.
Tuesday, bolstered by bullish analyst forecasts, a weakening ringgit and expectations recent dry weather and haze will curb crop output.
By Tuesday's close, the benchmark December palm oil contract on the Bursa Malaysia Derivatives (BMD) exchange was up 2.38 percent at 2,450 ringgit ($549.82) a tonne, after dipping to as low as 2,352 ringitt during the morning session.
The benchmark touched 2,460 ringgit in the afternoon session, it's highest since June 2014.
Traded volume stood at 72,597 lots of 25 tonnes each, roughly double the average 35,000 lots usually traded daily. "In the afternoon the spike came because of the news coming out of India," said a trader at a foreign commodities brokerage in Kuala Lumpur, referring to statements by leading analyst James Fry at an industry conference in Mumbai.
"When someone like James Fry who has been very bearish on crude oil has suddenly turned bullish, people holding positions take note."
Crude palm oil (CPO) prices are likely to surge 40 percent to $700 per tonne by mid-2016 as an El Nino weather event dents output and as top producer Indonesia uses more palm-based biodiesel, Fry said.
Prices are also being propped up by the recent weakening of the ringgit, the trader said.
"The Malaysian economy is still playing air walk, and invariably when the ringgit weakens it affects the BMD, because some people trade BMD to hedge their ringgit positions also."
The depreciation of the ringgit, which has lost nearly around 28 percent this year, makes palm cheaper for offshore buyers, supporting demand and, subsequently, prices.
Worries that El Nino, a warming of sea surface temperatures which can lead to scorching temperatures in Asia and East Africa, could weigh on crop yields in Asia also supported palm prices.
"The key now is production," a second trader said, referring to impacts of the recent dry weather and haze on output of the edible oil in the longer term.
World palm oil output growth will be halved next year due to the El Nino weather pattern, leading vegetable oil analyst Thomas Mielke said late on Monday.
Meanwhile, palm oil imports by India, the world's top importer of edible oils, are also expected to climb to record levels in 2016, also as a result of dry weather, which is seen restricting supplies, a veteran trader said on Monday.
In competing vegetable oil markets, the U.S. December soyoil contract was down 0.66 percent in late Asian trading,
while the most active January soybean oil contract on the Dalian Commodity Exchange fell 1.36 percent.
while the most active January soybean oil contract on the Dalian Commodity Exchange fell 1.36 percent.
Oil prices rose after evidence of tightening supplies in the United States, the world's biggest oil consumer, outweighed concerns over the health of the Chinese economy.
Palm, soy and crude oil prices at 1104 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT5 2395 +72.00 2323 2395 291
MY PALM OIL NOV5 2414 +59.00 2317 2423 5471
MY PALM OIL DEC5 2450 +57.00 2352 2460 40428
CHINA PALM OLEIN JAN6 4418 -94.00 4384 4532 1420076
CHINA SOYOIL JAN6 5362 -74.00 5334 5460 689774
CBOT SOY OIL DEC5 27.55 +3.90 27.06 27.70 17243
INDIA PALM OIL SEP5 426.10 +3.90 421.60 426.30 414
INDIA SOYOIL OCT5 604.45 +1.35 601.10 607.30 41005
NYMEX CRUDE NOV5 44.85 +0.42 44.30 44.95 26470
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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 4.4560 ringgit)
- Reuters
Contract Month Last Change Low High Volume
MY PALM OIL OCT5 2395 +72.00 2323 2395 291
MY PALM OIL NOV5 2414 +59.00 2317 2423 5471
MY PALM OIL DEC5 2450 +57.00 2352 2460 40428
CHINA PALM OLEIN JAN6 4418 -94.00 4384 4532 1420076
CHINA SOYOIL JAN6 5362 -74.00 5334 5460 689774
CBOT SOY OIL DEC5 27.55 +3.90 27.06 27.70 17243
INDIA PALM OIL SEP5 426.10 +3.90 421.60 426.30 414
INDIA SOYOIL OCT5 604.45 +1.35 601.10 607.30 41005
NYMEX CRUDE NOV5 44.85 +0.42 44.30 44.95 26470
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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 4.4560 ringgit)
- Reuters
Source : The Star
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