Malaysian palm oil futures fell to a one-week low on Friday, tracking a selloff in global markets, although rising demand and a weak ringgit provided support and capped losses. Investors avoided taking risky positions in the tropical oil after equities and commodities markets fell sharply on the US Federal Reserve's plan to scale back its economic stimulus.
But supportive fundamentals, with Malaysia's palm exports rising as much as 16 percent for the June 1-20 period compared to a month ago, trimmed weekly losses and the edible oil ended just one ringgit lower from a week ago. "It's mostly overseas factors today. Global markets were down and this has a strong impact on crude palm oil. It gave traders an excuse to sell and consolidate," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But the market is supported in the short-term as we still have strong Ramadan demand," the trader said. The benchmark September contract on the Bursa Malaysia Derivatives Exchange lost 1 percent to close at 2,438 ringgit ($761) per tonne. Prices earlier fell to 2,421 ringgit, a level last seen on June 14. Total traded volume stood at 24,029 lots of 25 tonnes each, lower than the average usual 35,000 lots.
Traders said a weak ringgit could spur more purchases of crude palm oil, pushing exports higher for the month. The ringgit-priced feedstock becomes cheaper for overseas buyers and refiners when the currency fall against the US dollar. Higher shipments would ease Malaysian palm oil stocks further in June after a decline to 1.82 million tonnes at end-May, the lowest in nearly a year. In vegetable oil markets, US soyaoil for July edged down 0.2 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 2.9 percent.
Comments
Comments are closed.