Malaysian palm oil futures reached a one-month high on Tuesday, buoyed by a weak ringgit currency and higher demand from refiners on improving margins. The benchmark November contract on the Bursa Malaysia Derivatives exchange closed higher by 2.1 percent at 2,090 ringgit ($481.68) a tonne after reaching 2,100 ringgit, its highest since August 3.
Traded volume stood at 37,731 lots of 25 tonnes each, above the daily average of 35,000 lots. “The direct impact of palm oil prices today is from the weakening of the ringgit,” said a trader based in Kuala Lumpur. “Another reason is we’re seeing fairly good demand, as refining margins have improved very much. We’ve not seen these margins of 250 ringgit today for quite some time.”
The ringgit had shed 0.3 percent on Tuesday, ending the day at 4.3390 against the dollar. It has plunged more than 20 percent this year as emerging Asia’s worst performing currency. In competing vegetable oil markets, the most active January soybean oil contract on the Dalian Commodity Exchange and the Dalian palmoil for January were both up 1.4 percent. The US December soyoil contract rose 1.4 percent. Oil prices, however, remained weak amid further uncertainty in the global economic outlook, and as co-operation between oil producing nations to curb oversupply seemed unlikely. Palm oil often takes price direction from crude oil, as vegetable oils are increasingly used in making renewable fuels.