KUALA LUMPUR: Malaysian palm futures hit their highest in more than four years on Friday before easing to close in negative territory on weakness in related oils and a stronger ringgit.
Palm oil prices often track the movements of related vegetable oils, such as soyoil, on the Chicago Board of Trade and China’s Dalian Commodity Exchange as they compete for a share in the global vegetable oils market.
Benchmark palm oil futures for February delivery on the Bursa Malaysia Derivatives Exchange were down 0.1 per cent at RM3,076 tonne at the end of the trading day.
Earlier in the session, they hit their highest since August 27, 2012, at RM3,106, tracking overnight soyoil strength.
Traded volumes stood at 39,998 lots of 25 tonnes each, below the 2015 daily average of 44,600 traded lots in a day. The market is up 1.5 per cent for the week for a second straight week of gains.
“The market opened higher on the back of stronger soyoil, which then eased. Dalian did not appreciate much and there was the ringgit recovery,” one trader said, referring to edible oil futures on China’s Dalian Commodity Exchange.
“This gives palm a good opportunity to consolidate, but the rally will continue on other bearish factors, such as the weather.”
The year-end monsoon season in Malaysia, the world’s second-largest palm producer, usually brings heavy rains across the country and disrupts fruit-harvesting.
The January CBOT soybean oil contract was down 0.5 per cent, while the May soybean oil contract on the Dalian Commodity Exchange was virtually flat.
The May contract for palm olein on the Dalian Commodity Exchange was up 1.3 per cent.
A stronger ringgit also weighs down on palm oil by making it more expensive for holders of other currencies. The ringgit, palm’s traded currency, strengthened 0.3 per cent to 4.45 per dollar on Friday evening.
Signals are mixed for palm oil as it failed to break a resistance at RM3,093 a tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals. — Reuters