Palm edges higher, but set for weekly drop on lower exports

[SINGAPORE] Malaysian palm oil futures were set for their first weekly drop in four even as prices recovered slightly on Friday (Oct 15) on the back of a weaker ringgit and gains in rival oils.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange rose 24 ringgit, or 0.5 per cent, to 4,901 ringgit (S$1,591.02) a tonne in early trade, after a near 3 per cent drop in the previous session.

"It's due to overnight gains in external markets and weak ringgit," a Kuala Lumpur-based trader told Reuters.

Chicago Board of Trade soybean futures rose overnight, finding chart support after sharp losses over the past two sessions on higher-than-expected U.S. grain supply forecasts.

The soybean oil contract was last down 0.3 per cent.

Meanwhile, the Dalian Commodity Exchange's most-active soyoil contract rose 0.5 per cent, while its palm oil contract eased 0.7 per cent.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

The ringgit fell against the US dollar after 6 straight sessions of gains. A weaker ringgit makes palm more attractive for holders of foreign currencies.

The trader said prospects of weaker exports limited the gains in palm oil.

Exports of Malaysian palm oil products for Oct 1 to 10 fell 9.4 per cent from the same period a month earlier, cargo surveyor Societe Generale de Surveillance said on Tuesday (Oct 12).

Lower exports saw palm prices fall this week. The benchmark palm contract is down 0.8 per cent so far this week after three consecutive weeks of gains.

Palm oil may retest a resistance at 5,048 ringgit per tonne, a break above which could lead to a gain into a range of 5,187 to 5,274 ringgit.

US soybean futures edged lower on Friday (Oct 15) and were poised to record weekly losses of more than 3 per cent as forecasts for ample global supplies offset hopes of renewed Chinese demand.

REUTERS