Palm oil recovers from steep losses as ringgit falls

August 16, 2022: Malaysian palm oil futures rose on Tuesday, recovering from sharp losses in the previous session, supported by a weakening ringgit.

The benchmark palm oil contract FCPOc3 for November delivery on the Bursa Malaysia Derivatives Exchange gained 129 ringgit, or 3.12%, to 4,267 ringgit ($955.87) a tonne during early trade, up for a third in four sessions.

FUNDAMENTALS

A widening discount between crude palm oil and soybean oil, now at about $520 per tonne, and a weakening ringgit has also spurred demand, Refinitiv Commodities Research said in a note late Monday.

The ringgit MYR=, palm's currency of trade, fell 0.16% against the dollar, making the commodity cheaper for holders of foreign currency.

Exports of Malaysian palm oil products for Aug. 1-15 fell 9.5% to 516,072 tonnes from the same week in July, cargo surveyor Societe Generale de Surveillance said.

Dalian's most-active soyoil contract DBYcv1 fell 0.7%, while its palm oil contract DCPcv1 lost 0.6%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.03%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil looks neutral in a narrow range of 4,085 ringgit to 4,269 ringgit per tonne, and an escape could suggest a direction, Reuters technical analyst Wang Tao said. 

MARKET NEWS

Global equities and the U.S. dollar advanced on Monday despite weaker-than-expected economic data in China that prompted its central bank to cut its lending rate, stoking concerns of a global recession. 

Oil prices fell, extending losses from the previous session, after economic data from China, the world's largest crude importer, spurred fresh concerns about a potential global recession that could hit energy demand.

Reuters