Malaysian palm oil price up on improving exports, low output forecast
Malaysian palm oil futures rose on Thursday evening, driven by improving exports and lowered production forecasts and despite a strengthening ringgit, which typically weighs on prices
The ringgit strengthened 0.2 percent against the dollar on Thursday. A stronger ringgit makes palm oil more expensive for foreign currency holders and usually lowers demand.
Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange were up 2 percent at 2,796 ringgit ($630.01) a tonne at the end of the trading day. In the previous session, they recorded their strongest daily rise in four months.
Traded volumes stood at 77,463 lots of 25 tonnes each on Thursday evening.
"The rise in the market is likely driven by production, which we hear is still bad while exports are good, so prices are stable," said a Kuala Lumpur-based trader.
Demand for palm oil from Malaysia, the world's second-largest producer after Indonesia, has picked up recently after a slow start to March, according to cargo surveyor data.
Intertek Testing Services showed a 5.5 percent decline in shipments for the first half of March from the same period the month before, while Societe Generale de Surveillance showed a 1.1 percent gain, versus a 25 percent drop in exports for the first ten days of the month.
Palm oil production is seen recovering during the second half of the year, dragging prices down to around 2,500 ringgit, industry experts forecast. However, traders say the recovery may not be as quick as expected due to the lingering effects of a crop-damaging El Nino.
Malaysian output fell 1.4 percent in February month-on-month, while end-stocks declined 5.3 percent to 1.46 million tonnes. <MYPOMP-CPOTT> <MYPOMS-TPO> Palm oil may rise to 2,876 ringgit per tonne, as it has pierced above a resistance at 2,815 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.
In other related vegetable oils, soybean oil on the CBOT climbed as much as 0.9 percent, while the May soybean oil contract on the Dalian Commodity Exchange fell 0.2 percent.
The May contract for palm olein on the Dalian Commodity Exchange rose as much as 1.9 percent.