Malaysian palm oil hits 6-week high

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palm-oil1Palm oil futures rose to a 6-week high on August 23 amid speculation that the weakening Malaysian ringgit will boost exports.

The contract for November delivery rose 0.6 per cent to 2,369 ringgit ($716) per metric tonne on the Bursa Malaysia Derivatives. Prices this week rose 2.6 per cent after rising 4.6 per cent last week. This was the first two-week gain since June 2013.

Other Malaysian exports have also gained this month. According to Bloomberg News, exports in the first 20 days of August increased 10 per cent over the same period in July.

The underlying cause for these gains is a steadily weakening ringgit, which reached its lowest level in three years against the US dollar on August 22, and has fallen by 7.5 per cent this year.

Also supporting palm oil futures is a sudden rush of demand from India, the world’s largest importer of the commodity. Indian demand was on the decline just two weeks ago. This inconsistent behaviour is largely attributable to fallout from the depreciation of the Indian rupee, which fell to an all-time low this month.

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Reading Time: 1 minute

Palm oil futures rose to a 6-week high on August 23 amid speculation that the weakening Malaysian ringgit will boost exports.

Reading Time: 1 minute

palm-oil1Palm oil futures rose to a 6-week high on August 23 amid speculation that the weakening Malaysian ringgit will boost exports.

The contract for November delivery rose 0.6 per cent to 2,369 ringgit ($716) per metric tonne on the Bursa Malaysia Derivatives. Prices this week rose 2.6 per cent after rising 4.6 per cent last week. This was the first two-week gain since June 2013.

Other Malaysian exports have also gained this month. According to Bloomberg News, exports in the first 20 days of August increased 10 per cent over the same period in July.

The underlying cause for these gains is a steadily weakening ringgit, which reached its lowest level in three years against the US dollar on August 22, and has fallen by 7.5 per cent this year.

Also supporting palm oil futures is a sudden rush of demand from India, the world’s largest importer of the commodity. Indian demand was on the decline just two weeks ago. This inconsistent behaviour is largely attributable to fallout from the depreciation of the Indian rupee, which fell to an all-time low this month.

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