Malaysian palm oil futures edged up today, following gains in overseas soyoil markets, although a stronger ringgit and investor wariness ahead of industry data capped the advance and kept prices in a tight range.
Palm prices have lost about 1% this week and are set for their second straight weekly fall after sliding to over three-month lows, weighed down by volatility in comparative soy markets and a stronger ringgit.
"The Dalian and US soybean oil (markets) were marginally higher. Although the ringgit is strong, the palm market pulled up a bit," said a trader with a foreign commodities brokerage.
"Prices are contained in a tight range, volume is light today. They (investors) want to see the MPOB data next week," the Malaysia-based trader added.
By the midday break, the benchmark July contract on the Bursa Malaysia Derivatives Exchange had edged up 0.1%, or RM3, to RM2,567 per tonne. Prices traded in a tight range between RM2,552 and RM2,572.
Total traded volume stood 6,061 lots of 25 tonnes, less than half of the average 12,500 lots as most investors stayed on the sidelines.
Technicals showed a bearish target at RM2,519 per tonne remains unchanged for palm oil, as it could have completed a consolidation around a support at RM2,572, said Reuters
market analyst Wang Tao.
Market players have also avoided risky bets this week ahead of an industry report from the Malaysian Palm Oil Board next Monday, that will detail April palm oil stocks, output and exports in the second-largest grower.
A Reuters poll yesterday showed that Malaysian palm oil stocks likely inched up to a three-month high of 1.70 million tonnes in April, with production volumes seen at their highest since December last year.
A slight pick-up in exports, however, could have checked the rise in stockpiles, the poll of six traders and planters showed.
The Malaysian ringgit gained as much as 0.5% today to trade at 3.2200 per US dollar, its strongest since April 10, after Bank Negara Malaysia signalled the central bank may need to tighten monetary policy soon.
A stronger ringgit makes palm feedstock, which is ringgit-denominated, more expensive for overseas investors and refiners.
In competing vegetable oil markets, the US soyoil contract for July rose 0.4% in early Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.3%.
In other markets, Brent crude held steady above US$108 per barrel, supported by renewed tension in Ukraine and continued limited supply from Libya, but still on track for a second weekly loss. – Reuters, May 9, 2014.