Malaysian palm oil falls

Malaysian palm oil futures edged down on Wednesday, their first decline in three days, tracking weaker related oils and due to slowing export demand. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 0.9 percent at 2,414 ringgit ($608.83) a tonne at the close of trade, its sharpest daily fall in nearly two weeks.
Palm had earlier jumped to a one-month high on Monday tracking a weaker ringgit following the election defeat of a coalition that ruled the country for six decades. It ended Monday 1.5 percent higher, while continuing gains on Tuesday as well.
Trading volume stood at 38,942 lots of 25 tonnes each at Wednesday's close.
"Palm is lower today on last night's soyaoil and also the weaker Dalian," said a Kuala Lumpur-based trader, referring to the overnight decline in soyaoil on the US Chicago Board of Trade and China's Dalian Commodity Exchange.
Another trader added that she expected the market to trade sideways due to several factors.
"The market is holding on a weak ringgit and a slower-than-expected increase in production," she said, as a weaker ringgit typically supports palm by making it cheaper for holders of foreign currencies.
"But palm demand is expected to slow also as its spread against soyaoil does not make it competitive. Malaysia's crude palm oil export tax is also there."
Palm oil shipments from Malaysia, the world's second largest exporter, fell 13.7-14.9 percent in the first half of May versus the corresponding period in April, data from inspection company AmSpec Agri Malaysia and cargo surveyor Societe Generale de Surveillance showed on Tuesday.
Traders said the demand slowdown could be attributed to Malaysia's resumption of a crude palm oil export tax, which was set at 5 percent in May following four previous months of suspension.
Malaysia announced on Wednesday it will keep its crude palm oil tax rate at 5 percent in June.
In other related oils, the Chicago July soyabean oil contract declined 0.4 percent on Tuesday and was last down 0.6 percent on Wednesday.
Meanwhile, the September soyabean oil on China's Dalian Commodity Exchange was down 0.8 percent and the Dalian September palm oil contract fell 0.4 percent.
Palm oil is affected by movements in rival edible oils as they compete for a share in the global vegetable oils market.