Palm gains on bearish outlook, slightly weaker Ringgit
After a selloff triggered by a major data release and a bearish outlook, Malaysian palm futures gained on Wednesday, snapping the losses of the previous session. The ringgit was also marginally weaker.
By midday, the benchmark palm oil contract for April delivery at the 'Bursa Malaysia Derivatives Exchange' had risen 27 ringgit (0.66%) to 4,122 ringgit (1,050.46) per metric tonne.
The market has adjusted to yesterday's oversold condition due to the bearish forecast from The Malaysian Palm Oil Council. This is despite the first decrease in end-stock figures since a long time. The range will be trading between 4,050 to 4,150 ringgit at the moment, said a Kuala Lumpur based trader.
Dalian's soyoil contract with the highest volume?was down by 0.02% while palm oil contracts fell by 0.54%. Prices of soyoil on the Chicago Board Of Trade fell by 0.17%.
As it competes to gain a share in the global vegetable oil market, palm oil follows the price movement of its rival edible oils. Data revealed that Malaysian palm oil stocks fell 7.72% in January, the first time in 11 months. This was due to an increase in exports, despite a drop in production.
AmSpec Agri reports that exports of Malaysian products containing palm oil between February 1 to 10 were down 14.3% compared to January 1 to 10. Intertek Testing Services, a cargo surveyor, reported a decline of 10.5%. James Fry, a veteran palm oil analyst, said that the artificial intelligence bubble would burst within 'the short term, affecting all commodity prices including crude palm oil. Analyst Thomas Mielke said that palm oil sales to top buyers India and China will increase from January through April of this year, while stocks are set to fall. Analyst Thomas Mielke told an industry conference on Wednesday that Malaysia's oil palm plantations will 'grow' to 2 million ha (4.94m acres) in 2027, up from their current level of 1.7 million ha. This is expected to put pressure on the output from the second largest producer.
The palm ringgit's currency has weakened by 0.08% in relation to the dollar. This makes the commodity cheaper for foreign currency buyers.
According to Wang Tao, a technical analyst, palm oil FCPOc3 could stabilize in the support range of 4,063-4.083 ringgit/metric ton, and then bounce back, he said.
(source: Reuters)