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Biggest jump for palm in nearly 5 months on short-covering, weak ringgit
[KUALA LUMPUR] Malaysian palm oil futures rose on Wednesday, marking their sharpest jump in nearly five months, as traders covered short positions after four sessions of losses and as the ringgit sunk to its weakest in five weeks.
The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was 3 per cent higher at RM2,616 (S$897) per tonne by the close of trade.
Palm lost 4.8 per cent last month, weighed down by poor export demand, and hit a near two-month low in the previous session.
Traded volumes were 68,084 lots of 25 tonnes each at the end of the trading day, higher than the 2015 daily average of 44,600.
"The market was earlier oversold, and the weak ringgit triggered covering and technical buying as prices moved above RM2,600," said a trader from Kuala Lumpur.
A weaker ringgit, the currency palm oil is traded in, usually supports palm by making it cheaper for foreign currency holders.
The ringgit fell 1.5 per cent against the dollar on Wednesday, settling at 3.9860 in the evening after earlier reaching 3.9900.
In competing oils, the September soybean oil contract on the Dalian Commodity Exchange rose 0.6 per cent, while the May Chicago Board of Trade soyoil contract gained 1.5 per cent.
The offer price for crude palm kernel oil stood at 4,861.17 ringgit per tonne in the evening, according to price assessments by Thomson Reuters.