JAKARTA: Malaysian palm oil futures dropped on Thursday, snapping three straight sessions of gains, dragged down by weaker rival vegetable oil prices and a stronger ringgit.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange fell 2.27% to 4,138 ringgit ($939.39) a tonne by midday.
“Today our market is following Chicago Board of Trade soyoil leads as well as weaker Dalian palm oils pricing,” a Kuala Lumpur-based trader said, adding that the strengthening in ringgit would also discourage exports.
Exports of Malaysian palm oil in November rose between 1.7% and 5.6% from the month before, according to data from cargo surveyors Intertek Testing Services and Amspec Agri.
Indonesia set reference price of its crude palm oil (CPO) at $824.32 per tonne for Dec. 1-15 shipments, a Trade Ministry regulation showed on Wednesday, keeping export tax at $33 per tonne and levy at $85 per tonne. Soyoil prices on the Chicago Board of Trade were down 3.31%.
Dalian’s most active soyoil contract and its palm oil contract fell 0.15% and 0.8% respectively.
Palm oil logs second consecutive monthly rise
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The ringgit gained 0.86% against the US dollar after a 1.37% rally on Wednesday, touching its strongest in more than five months.
A stronger ringgit makes palm oil less attractive for holders of foreign currencies.
Palm oil may retest a resistance at 4,329 ringgit a tonne, a break above which could lead to a gain into 4,400-4,497 ringgit range, Reuters technical analyst Wang Tao said.