Palm Oil Futures Post Weekly Gain as Ringgit Drop Lures Buyers

Jan 16, 2014 5:40 am ET

Jan. 16 (Bloomberg) -- Palm oil capped a weekly gain as the Malaysian currency dropped against the U.S. dollar, boosting demand for ringgit-denominated futures.

The contract for March ended little changed at 2,525 ringgit ($766) a ton on the Bursa Malaysia Derivatives, the highest price at close since Jan. 9. Futures increased 0.3 percent this week, posting a fourth weekly gain in five. The market will be shut for a local holiday tomorrow.

The ringgit dropped as an improving U.S. economy bolstered speculation the Federal Reserve will continue to reduce monetary stimulus. The currency touched 3.2997 per dollar today, the lowest level since Jan. 3, and posted its worst week in four, according to data compiled by Bloomberg.

“The ringgit will get weaker as the dollar is rebounding,” said Hiro Chai, vice president at CIMB Futures Sdn. in Kuala Lumpur. “That will probably give a bit of support to palm oil.”

Soybean oil for March delivery declined 0.2 percent to 37.90 cents a pound on the Chicago Board of Trade. Soybeans gained 0.3 percent to $13.2225 a bushel.

Refined palm oil for May delivery rose 1 percent to close at 5,836 yuan ($964) a ton on the Dalian Commodity Exchange. Soybean oil climbed 0.2 percent to end at 6,624 yuan.

--Editor: Thomas Kutty Abraham