Palm oil reaches a two-week high amid muted Indonesian supply outlook
The price of Malaysian palm oils futures reached a new two-week high Wednesday. This was boosted by the prospect of a weakening in supply from Indonesia, the world's biggest producer. However, softer data on exports capped gains.
The benchmark palm-oil contract for delivery in November on the Bursa Derivatives Market closed up 39 Ringgit or 1.05% at $3,754 ringgit (US$858.06) per metric ton.
The contract reached an intraday maximum of 3776 Ringgit, its highest level since August 6.
The palm oil price is uncompetitive against soft oils due to Indonesian production not meeting expectations. This is surprising as palm oil production is at its peak during this time of year.
Bajoria stated that this could change if Indonesian sales increase and palm oil is replaced by alternatives.
Dalian's palm oil contract, which is the most active contract, grew by 0.74%. Chicago Board of Trade soyoil prices increased by 0.82%.
As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.
Malaysia maintained its crude palm oil export tax at 8% and increased its reference price in September.
Anilkumar bagani, research director of Mumbai-based vegetable oil broker Sunvin Group, says that markets expect Indonesia's palm palm oil reference price will rise. This has given some support to Malaysian Palm Oil, as current export duties and levies will be raised one bracket higher.
Bagani stated that Malaysia's consistently weak palm oil export performances and the stronger ringgit are limiting gains in palm oils.
Data from Intertek Testing Services, a cargo surveyor, and AmSpec Agri Malaysia, an independent inspection company, showed that exports of palm oil products from Malaysia for the period August 1-20 were down between 16.7% and 18.4% compared to the previous month.
The Malaysian Ringgit, the currency used by palm to trade its products, reached a new 18-month high Wednesday.
Palm oil becomes less appealing to foreign currency holders when the ringgit strengthens. $1 = 4.3750 Ringgit (Reporting and editing by Savio D’Souza, Mrigank Dhaniwala).
(source: Reuters)
