Palm reverses direction to increase but is set for a second weekly loss

The price of Malaysian palm oils futures rose on Friday due to a weaker Ringgit and a decision by the United States to lower tariffs on Malaysian goods.

At midday, the benchmark palm oil contract on Bursa Derivatives Exchange for October delivery gained 14 ringgit or 0.33% to 4,244 Ringgit ($992.75) per metric ton.

The contract has fallen 1.68% in the first week.

Anilkumar bagani, Sunvin Group's research head, says that a rebound in South American soybean oil and a weaker Ringgit have helped prices recover after an initial setback. The reduction of U.S. tariffs on Malaysian products to 19%, from 25%, also has taken some bearishness out of the market.

Paramalingam Supramaniam said that the market was awaiting data on production and exports for July. Once these figures were released, it would be easier to determine market direction.

Malaysia's production is better than anticipated in July. Exports are still very low, but we do expect ending stock to be above 2.1 millions tons in July.

According to cargo surveyors, palm oil exports dropped between 6.7% and 9,6% in July.

On August 11, the Malaysian Palm Oil Board will release its July demand and supply data.

Dalian's palm oil contract, which is the most active contract, gained 0.04%. Chicago Board of Trade soyoil prices were up by 0.37%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The palm ringgit's trade currency, the dollar, has weakened by 0.35%, making the commodity more affordable for buyers who hold foreign currencies.

Oil prices were barely changed, after dropping more than 1% the previous session. Traders digested the impact new and higher U.S. Tariffs which may curb economic activity as well as lower global fuel growth.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

(source: Reuters)