Malaysian palm oil futures surrendered gains and closed lower on Friday, as weakness in rival soyaoil and the ringgit's recovery from one-week lows weighed on the market. The benchmark third-month palm oil contract on Bursar Malaysia Derivatives, October, ended down 8 ringgit at 1,344 ringgit ($358.4) a tonne, after trading as high as 1,358 ringgit in the morning.
Other traded months settled 6 to 12 ringgits lower. Overall volume stood at 3,162 lots, down from Thursday's 5,647. Dealers said prices, which on Thursday hit their lowest level since February 22, could remain under pressure through next week due to fears of an increase in palm oil production and slackening demand.
The government-run Malaysian Palm Oil Board is due to release next on Wednesday official production, exports and closing stock numbers for July.
Two independent shipping surveyors will issue on the same day export estimates for the first 10 days of August. Palm oil prices had risen in the after the Malaysian currency fell to a one-week low of 3.7580 against the dollar.
The ringgit later bounced back to 3.7505, compared with 3.7450 at the close of Asian trading on Thursday. Palm oil is exported in dollars. But its futures prices, which also determine export prices, are quoted in ringgit.
A weaker ringgit makes palm oil exports more competitive and gives traders the flexibility of raising prices. September soyaoil futures on the Chicago Board of Trade fell 0.05 cent per lb.
On Friday's electronic session, extending on Thursday's 0.19-cent drop. Soya and palm compete for export destinations and their prices often move in step.
In physical dealings of crude palm oil on Friday, August contract was offered at 1,335 ringgit a tonne against bids of 1,330 in the southern and central regions of Malaysia.
Trades were reported at 1,345-1,335 ringgit in both regions.
PALM OIL FUTURES:
August (south): 1335.
Open/High/Low: 1352/1358/1344.
Previous closes: 1340.
PALM OIL PHYSICALS:
October (3rd month): 1344.
Previous settlement: 1352.
FUTURES:
Surrender gains to close 6 to 12 ringgit a tonne lower. As weaker soyaoil weighs.
PHYSICALS: Also end down.
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