The strengthening of the crude palm oil (CPO) price continued for the third consecutive trading day on Friday morning (21/07), supported by strong exports and bad weather. CPO futures (October 2017 contract), the most-active contract at Bursa Malaysia, had risen 0.16 percent to 2,580 ringgit per ton by 10:17 am local Jakarta time zone. Earlier in the morning the CPO price opened with a gain after rising 2.02 percent to 2,576 ringgit per ton on Thursday (19/07).
The surge in palm oil prices over the past couple of days is caused by better-than-expected export demand. Paramalingam Supramaniam, Director of brokerage firm Pelindung Bestari, said CPO export demand is indeed better than analysts have been expecting. Moreover, he expects CPO prices to remain buoyant and can go up further in case there occurs speculative buying.
According to Intertek data, Malaysia's palm oil exports rose 10.5 percent month-on-month (m/m) in the 1 - 20 July 2017 period to 796,664 tons. Meanwhile, China's General Administration of Customs (CNGOIC) predicts an increase in palm oil imports during the August-September 2017 period.
Supramaniam added that bad weather conditions in the United States help sustain
the price of vegetable oils.
In Indonesia, crude palm oil reserves unexpectedly plunged to the lowest level in at least 17 months in May 2017, as demand rose.
The Indonesian Palm Oil Entrepreneurs Association (GAPKI) reported that Indonesia's palm oil reserves dropped 30 percent (m/m) to 621,000 tons. Meanwhile, production levels rose 8 percent (m/m) and kernel oil exports rose 2 percent (m/m).
The price of palm oil is actually able to stay in positive territory even though the Malaysian ringgit has been strengthening at the same. Today the ringgit is seen appreciating slightly against the US dollar.