Malaysian palm oil price rises on short-covering, higher exports

The palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 0.3 percent to 2,527 ringgit ($620) per tonne at the close of trade, recovering from an intraday low of 2,505 ringgit, which was also a fresh 10-week low for the commodity.

 

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KUALA LUMPUR: Benchmark Malaysian palm oil futures rose on short-covering on Friday following two sessions of losses and as surveys showed exports picked up in May, but lost more than 2 percent on the week, its second straight weekly decline. 

Malaysian palm oil shipments rose 6-9 percent during May 1-20, lifted by exports to India and Pakistan on demand ahead of the Ramadan festival, data from two cargo surveyors showed on Friday.  

The Muslim holy season of Ramadan starts in early June this year. This means demand for palm oil used in cooking is typically higher in palm consuming markets such as India, Pakistan and the Middle East.

The palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange rose 0.3 percent to 2,527 ringgit ($620) per tonne at the close of trade, recovering from an intraday low of 2,505 ringgit, which was also a fresh 10-week low for the commodity.

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Palm however lost 2.6 percent this week, a second consecutive weekly loss. 

Traded volumes stood at 49,019 lots of 25 tonnes each on Friday compared with a 2015 daily average of 44,600.   "At current levels the trade is aware that fundamentals remain bullish and will remain so next month with the fasting month," said a trader in Kuala Lumpur.     "Thus the short-covering at current low levels reflects the above scenario."

Palm oil may however test a support at 2,500 ringgit per tonne, with a good chance of breaking below this level and falling further towards the next support at 2,484 ringgit, a technical analysis by Wang Tao, Reuters' market analyst for commodities and energy technicals, showed. 

In related vegetable oils, the Chicago Board of Trade soyoil contract for August was down 0.3 percent, while the September soybean oil contract on the Dalian Commodity Exchange lost 1.3 percent.- Reuters