Palm oil headed for a second weekly advance as the depreciation of the Malaysian currency increased the appeal of ringgit-denominated commodity.
The contract for March delivery rose and fell at least 0.2 percent before trading little changed at 2,630 ringgit ($799) a metric ton on the Bursa Malaysia Derivatives at the midday break. Futures gained 1.8 percent this week.
Palm oil entered a bull market in November as output fell at plantations in Indonesia, the biggest supplier, and biodiesel demand increased. Malaysia’s ringgit fell against the dollar for a 10th week, its longest losing streak in almost 21 years, after U.S. economic data bolstered the case for the Federal Reserve to further cut stimulus.
“The weaker ringgit makes palm oil attractive to foreign buyers because it is more affordable now compared to greenback-denominated commodities, especially to U.S. soybean oil,” Teoh Say Hwa, head of investment at Phillip Futures Pte in Singapore, said by phone today.
Palm oil’s discount to soybean oil was $63.91 a ton today compared with $297.44 at the beginning of this year, data compiled by Bloomberg shows.
The tropical oil may trade between 2,500 ringgit a ton and 2,700 ringgit in 2014 as biodiesel usage in the biggest producers Indonesia and Malaysia boosts demand, Mohd Emir Mavani Abdullah, chief executive officer of Felda Global Ventures Holdings Bhd. said today.
Soybean oil for March delivery was little changed at 39.15 cents a pound on the Chicago Board of Trade, while soybeans gained 0.2 percent to $13.08 a bushel.
Refined palm oil for May delivery climbed 0.2 percent to 5,956 yuan ($981) a ton on the Dalian Commodity Exchange. Soybean oil was unchanged at 6,874 yuan.
To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net