Dec. 27 (Bloomberg) -- Palm oil posted a second weekly advance as the depreciation of the Malaysian currency increased the appeal of ringgit-denominated commodity.
The contract for March delivery dropped 0.1% at close to 2,632 ringgit ($800) a metric ton on the Bursa Malaysia Derivatives in Kuala Lumpur, trimming the weekly gain to 1.9 percent.
Palm oil entered a bull market in November as output fell at plantations in Indonesia, the biggest supplier, and biodiesel demand increased. Malaysia’s ringgit halted a nine-week decline against the dollar, its longest losing streak in eight years, to end little changed this week, after U.S. economic data bolstered the case for the Federal Reserve to further cut stimulus.
“The weaker ringgit makes palm oil attractive to foreign buyers because it is more affordable now compared to greenback- denominated commodities, especially to U.S. soybean oil,” Teoh Say Hwa, head of investment at Phillip Futures Pte in Singapore, said by phone today.
Palm oil’s discount to soybean oil was $66.79 a ton today compared with $297.44 at the beginning of this year, data compiled by Bloomberg shows.
The tropical oil may trade between 2,500 ringgit a ton and 2,700 ringgit in 2014 as biodiesel usage in the biggest producers Indonesia and Malaysia boosts demand, Mohd Emir Mavani Abdullah, chief executive officer of Felda Global Ventures Holdings Bhd. said today.
Soybean oil for March delivery advanced 0.2 percent to 39.25 cents a pound on the Chicago Board of Trade, while soybeans gained 0.2 percent to $13.08 a bushel.
Refined palm oil for May delivery climbed 1.8 percent to close at 6,050 yuan ($997) a ton on the Dalian Commodity Exchange. Soybean oil ended 0.7 percent higher at 6,922 yuan.
--Editors: Ovais Subhani, James Poole