KUALA LUMPUR: Malaysian palm oil futures dropped to their lowest in nearly three years on Thursday, tracking overnight declines in related edible oils, before trimming some losses on the back of a weaker ringgit.
A weaker ringgit, palm’s currency of trade, typically lends support to the edible oil by making it cheaper for foreign buyers. The ringgit weakened by 0.1 percent against the dollar to 4.0395 on Thursday evening.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.8 percent at 2,186 ringgit ($541.16) a tonne at the close of trade for a third straight session of losses.
Earlier in the session, the contract shed as much as 1.3 percent to 2,176 ringgit, its weakest since Sept. 22, 2015.
Trading volumes stood at 61,228 lots of 25 tonnes each at the close.
“Palm prices earlier weakened on China’s palm olein,” said a futures trader in Kuala Lumpur, referring to the palm contract on the Dalian Commodity Exchange. “Later, the weaker ringgit boosted sentiment.”
Palm oil has shed 6 percent since the start of the month, tracking weakeness in related oils because of concerns over the US-China trade dispute and on weak demand.
Palm oil prices are usually affected by the performance of other edible oils that compete for a share in the global vegetable oils market.
The Chicago December soybean oil contract edged down by 0.1 percent, as did the September soybean oil contract on China’s Dalian Commodity Exchange.
The Dalian September palm oil contract declined by 0.7 percent.
Palm oil is expected to drop further to 2,187 ringgit a tonne, having cleared support at 2,212 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
Source: Brecorder
