KUALA LUMPUR/ SINGAPORE: Malaysian palm oil futures fell on Thursday after hitting its highest closing price in more than seven months in the previous session, weighed down by a firmer ringgit, although strength in rival edible oils capped losses.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 10 ringgit, or 0.25% at 4,071 ringgit ($865.80) per metric ton at closing, logging a two-day low. The contract rose 2.38% a day ago, its biggest daily gain in nearly four months, fuelled by tight supply and optimism over palm demand. “The recent firm footing of palm oil premiums in both Malaysia and Indonesia is reflective of a short-term supply contraction as we transition through the monsoon period,” said Marcello Cultrera, director at commodities consultancy Apricus 8 Pte Ltd.
Minor restocking across various importers also contributed to the uptick in pricing dynamics, Cultrera added. Nonetheless, strength in the ringgit capped Malaysian palm oil futures upside, said a Kuala Lumpur-based trader.
The ringgit rose 0.6% against the US dollar as at 1000 GMT, as the Bank Negara Malaysia (BNM) kept its benchmark interest rate unchanged as anticipated. A stronger ringgit makes palm oil less attractive for foreign currency holders. The soyoil contract on the Dalian Commodity Exchange gained 0.45%, while its palm oil contract edged up 1%.
Meanwhile, soyoil prices on the Chicago Board of Trade increased 0.44%. Palm oil is affected by price movements in related oils as they compete for a share of the global vegetable oils market. Malaysia’s palm oil stocks are expected to drop below 2 million tons for the first time in six months at the end of February, with output likely to drop for a fourth consecutive month, a Reuters survey showed on Monday.
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