KUALA LUMPUR: Malaysian palm oil futures fell in early trade on Thursday, and looked set for a fourth decline in five sessions, as the edible oil was weighed down by a stronger ringgit and prospects of rising production, traders said.
The ringgit rose to its strongest level in over a year on Thursday morning. It earlier gained as much as 0.4 percent at 4.0950 against the dollar, but was last slightly down 0.1 percent at 4.1120 around noon.
Gains in the ringgit, palm’s currency of trade, usually make the vegetable oil more expensive for foreign buyers.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 0.7 percent at 2,626 ringgit ($638.62) a tonne at the midday break, its sharpest decline since Monday.
Traded volumes stood at 17,730 lots of 25 tonnes each at noon.
The market fell on the ringgit’s strength, said a futures trader from Kuala Lumpur, adding that production is also key to market movements now.
“November output could increase or see only a marginal decline,” he said.
Malaysia, the world’s second largest producer, last saw monthly output gains of 12.9 percent in October, according to data from an industry regulator.
Palm output typically declines towards the year-end after peaking in August or September, but the lingering effects of the dry weather El Nino phenomenon in 2015 could have delayed seasonal patterns this year.
In other related edible oils, the January soybean oil contract on the Dalian Commodity Exchange declined 0.1 percent, while the January palm olein contract was down 0.6 percent.
The December soybean oil contract on the Chicago Board of Trade was not traded as the exchange was closed for a national holiday on Thursday.
Palm oil is impacted by movements in other edible oils as they compete for a share of the global vegetable oils market.
Source: Brecorder.com
