KUALA LUMPUR: Malaysian palm oil futures, which fell on Friday as crude prices dropped and the ringgit firmed, are set to clock their highest monthly jump since December last year at 8% as demand improves.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slid 11 ringgit, or 0.49%, to 2,257 ringgit ($ 519.45) as of 0249 GMT.
However, palm oil is set to post its largest monthly gain this year on signs of improvement in demand, including from top importer China, as countries ease curbs imposed due to the COVID-19 pandemic.
Palm oil is also set for a 4% weekly rise as the world’s largest edible oil consumer, India, resumes buying from Malaysia after a diplomatic spat, and on forecast of lower production in May.
Oil prices edged lower after U.S. inventory data showed lacklustre fuel demand in the world’s largest oil consumer while worsening U.S.-China tensions weighed on global financial markets.
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
The ringgit, palm’s currency of trade, gained 0.07% against the dollar, making the edible oil more expensive for holders of foreign currency.
Dalian’s most-active soyoil contract rose 1.19%, while its palm oil contract gained 0.17%. Soyoil prices on the Chicago Board of Trade were trading down 0.4%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
A bullish target of 2,342 ringgit per tonne has been aborted for palm oil, as suggested by its wave pattern and a retracement analysis, Reuters technical analyst Wang Tao said.
Asia’s stock markets pulled back and major currencies were held in check on Friday, as investors await the U.S. response to China tightening control over the city of Hong Kong.