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BMD CPO Trades Firm Tracking Strong Palm- Soy On DCE, Weak Currency

30 Mar 2020 11:18 am
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Mumbai (Commoditiescontrol.com) - Malaysian palm oil futures rose on Monday, tracking higher Chinese edible oil prices and a weaker ringgit, but sharp decline in crude oil prices raised the concerns for biodesel demand capped gains.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange climbed 43 ringgit, or 1.8%, to 2,421 ringgit ) per tonne at end of morning session, a consecutive gain for the second day. Volume was 5307 lots while open interest for the June contract was 48088 lots.

Firm soy oil and palm oil at Dalian commodity exchange(DCE) supported the CPO prices at MDEX .At DCE May Soy oil was up by 40 points at 5480 CNY/MT while May RBD palm oil was up 118 pints at 4966 CNY/MT.

Malaysian palm oil has been firming up for two weeks on worries over disruption in supply, as Malaysia enforced a one-month restricted movement order and instructed some plantations to shut down due the coronavirus.

Weaker ringgit is supportive for the market.The Malaysian ringgit fell 0.46% against the dollar, making the CPO cheaper for holders of foreign currency.

However sharp fall in Crude oil prices and excess supply due to price war between Saudi Arabia and Russia limits gain in rise of palm prices. Brent crude oil at spot markets was trading down by 2.29$/barrel at 23.47 $/Barrel.

Due to weak crude oil price and weak global economy demand for CPO is likely to remain subdued in near term.

Technically 2425 level is crucial for June CPO contract. If it manages to break this level, current rally could continue for some more time.

(Commodities Control Bureau)

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