Tuesday, 24 March 2015 16:14
KUALA LUMPUR: Malaysian palm oil futures fell on Tuesday as a weak technical outlook, a stronger ringgit and worries about lacklustre demand from major buyers stopped the contract from adding to gains notched up in the previous session.
By the midday break, the benchmark June contract on the Bursa Malaysia Derivatives had lost 0.9 percent to 2,166 ringgit ($ 592) a tonne.
The price had climbed as high as 2,208 ringgit on Monday after Indonesia’s plan to impose levies on crude palm exports triggered hasty buying from the top producer. However, some traders had warned those gains were unsustainable.
“The market opened marginally higher, but there was no follow-through to what it did yesterday,” said one palm trader with a foreign commodities brokerage in Malaysia.
“Technically, the market is under pressure and it could not go beyond 2,200 ringgit. Exports in the first 20 days did not improve – it’s a global scenario, where people are not rushing to buy commodities.”
Total traded volume during the morning stood at 19,678 lots of 25 tonnes, above the average 12,500 lots.
Indonesia is planning a charge of $ 50 on every tonne of crude palm oil (CPO) shipped at a zero export tax rate, with the funds going to help pay for more biodiesel subsidies. The measure has to be approved by President Joko Widodo.
Analysts say the potential levy may weigh on CPO prices in Indonesia in the short term, but it could also stoke more domestic biodiesel consumption if implemented properly, which would help underpin prices.
A stronger ringgit curbed buying interest from overseas buyers on the Malaysian market.
Most emerging Asian currencies extended gains on Tuesday because of uncertainty over the timing of US interest rate rises, with the Malaysian ringgit rising to 3.6600 against the US dollar by 0530 GMT.
Brent and WTI crude dropped on Tuesday after activity in China’s factory sector fell to an 11-month low and as Saudi Arabia said its production was close to an all-time high.
In competing vegetable oil markets, the US soyoil contract for May fell 0.6 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange rose 0.4 percent.
Copyright Reuters, 2015
