Malaysian palm oil futures closed lower on Wednesday for a fourth consecutive session on back of weaker US soyaoil, reversing gains notched up earlier in the day. The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 0.2 percent to 2,250 ringgit ($554) a tonne at the close, after earlier rising as much as 0.8 percent in its first half of trade.
Palm had risen to a seven-month high last week before falling to a three-week low in its previous session. Trading volumes stood at 27,481 lots of 25 tonnes each at the end of the trading day. "The market was doing well until soyabean oil started coming down. The ringgit was also strong," said a Kuala Lumpur-based futures trader.
The ringgit, palm's currency of trade, strengthened 0.3 percent against the dollar on Wednesday evening. A stronger ringgit makes the vegetable oil more expensive for holders of other currencies. Another trader said the longer term outlook was supportive. "Production should drop at least 15 percent in February and while exports will also fall, the decline won't be that sharp," he said.
Output of palm oil, the world's most widely used edible oil, typically declines during the first quarter of the year in line with a seasonal trend. Exports of Malaysian palm oil products during Feb. 1-10 fell 11.2-15.8 percent from Jan. 1-10, according to cargo surveyors AmSpec Agri Malaysia, Intertek Testing Services and Societe Generale de Surveillance.
In other related oils, the Chicago March soyabean oil contract was down 0.4 percent, while the May contract on the Dalian Commodity Exchange fell 0.1 percent. The Dalian January palm oil contract was up 0.4 percent.
Palm oil prices are affected by movements in soyaoil rates, as they compete for a share in the global vegetable oil market. Palm oil may bounce towards 2,285 ringgit per tonne, as it has found a support at 2,249 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
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