KUALA LUMPUR, July 30: Malaysian palm oil futures inched up in choppy trade on Tuesday as investors hoped for an improvement in exports in the second half of July, although lacklustre soy markets in the United States continued to drag on the tropical oil.
Cargo surveyors will release data on Malaysian palm oil shipments for the whole month of July on Wednesday. While the exports are expected to fall, traders say the declines could be less steep than initially estimated.
Palm prices, which typically track overseas soy markets in the United States and China, have been depressed after forecasts of ideal weather conditions in the U.S. Midwest bolstered hopes for a bumper harvest that would raise global oilseed supplies.
‘Exports should be quite good for July, not withstanding that July has one extra day,’ said a trader with a foreign commodities brokerage in Kuala Lumpur.
‘Currently nothing seems to be budging. At this level a lot of people are not so comfortable in going short. I don’t think anybody is very keen to selldown any further,’ he added.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange was choppy in early trade, slipping to 2,137 ringgit per tonne before hitting 2,170 ringgit ($673) by the midday break to register a 0.1 percent increase. Prices were rangebound between 2,137-2,171 ringgit.
Total traded volume stood at 19,538 lots of 25 tonnes each, much higher than the average 12,500 lots.
Technicals showed palm oil seems to be forming a temporary bottom around a support at 2,136 ringgit, and may hover above this level for one more trading session, Reuters market analyst Wang Tao said.
But the ringgit which traded weaker against the greenback helped keep prices in check. A weaker ringgit makes palm oil cheaper for overseas buyers.
Phillip Futures analyst Sim Han Qiang said the weakening ringgit could be due to the country’s foreign outflows which were the highest among Asian currencies after the Indonesian rupiah and Indian rupee.
‘With U.S. Tapering in sight, outflows from emerging markets are likely to exacerbate and the U.S. Dollar is set to rally against most currencies. The ringgit is likely to sustain further loss going forward,’ he said in a note on Tuesday.
In other markets, Brent crude steadied above $107 a barrel as investors looked to a Federal Reserve meeting for clues on the outlook for the U.S. Monetary stimulus programme that has bolstered demand in the world’s No.1 oil consumer.
In vegetable oil markets, the U.S. Soyoil contract for December edged up 0.2 percent in early Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.5 percent.
(AGENCIES)
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