Palm Gains Most in Two Months as Ringgit Drop May Boost Demand

Jan 20, 2014 5:32 am ET

Jan. 20 (Bloomberg) -- Palm oil climbed the most in two months on speculation that a weakening Malaysian currency will increase demand for ringgit-denominated futures and stem a decline in exports.

The contract for April delivery advanced 1.6 percent to close at 2,580 ringgit ($778) a metric ton on the Bursa Malaysia Derivatives, the biggest gain for most-active futures since Nov. 21. The gain pared this year’s loss to 3 percent.

Exports from Malaysia, the second-biggest shipper, fell 15 percent to 748,303 tons in the first 20 days of January from the same period a month earlier, surveyor Intertek said today. That was less than the 28 percent drop in the first half of the month, Intertek data showed. Shipments to China, the second- biggest buyer, climbed 8.1 percent, the data showed. The nation celebrates the Lunar New Year festival from Jan. 31.

“The ringgit is likely to further weaken against the U.S. dollar and this will actually boost demand for the ringgit- denominated palm oil,” said Tan Chee Tat, an analyst at Phillip Futures Pte in Singapore. “Chinese New Year is at the end of the month and that’s likely to boost some export demand.”

The Malaysian currency fell to a four-month low of 3.3175 per dollar today and was the biggest loser among Asia’s 11 most- traded currencies. Palm oil inventories at China’s major ports decreased to 950,000 tons from 1.14 million tons a year earlier, the National Grain and Oils Information Center said today.

Soybean oil for March delivery declined 0.8 percent to 37.74 cents a pound on the Chicago Board of Trade on Jan. 17, while soybeans ended little changed at $13.165 a bushel. Markets in the U.S. are closed today for a public holiday.

Refined palm oil for May delivery rose 1.7 percent to close at 5,922 yuan ($979) a ton on the Dalian Commodity Exchange. Soybean oil climbed 1.4 percent to end at 6,702 yuan.

--Editor: Thomas Kutty Abraham