Malaysia palm oil futures hit a more than three-week low on Thursday as a stronger ringgit and weaker crude oil weighed on market sentiment, prompting players to unwind some positions. Crude oil prices were mixed in Asian hours, with the benchmark US crude contract dropping below $75 a barrel, approaching a three-month low on record stockpiles in the US Midwest.
Malaysian ringgit rose 0.3 percent to 3.19 per dollar after the country's central bank raised interest rates by 25 basis points to 2.5 percent. A stronger ringgit eats into refining margins as crude palm oil feedstocks are priced in that currency and refined products are exported in US dollars.
The benchmark July crude palm oil futures on Bursa Malaysia Derivatives Exchange closed down 1.4 percent or 35 ringgit to 2,472 ringgit ($772.5) a tonne after falling at one point to as low as 2,466 ringgit, a level unseen since April 20. Overall volume stood at 12,443 lots of 25 tonnes each. "The ringgit is strengthening and there is a sign that it's going to be stronger," a trader in Kuala Lumpur said.
"Traders are looking forward for the product price to rise since stocking for Ramazan will begin soon." A Reuters technical analysis showed that palm oil futures could head towards 2,360 ringgit a tonne. Indonesian palm market is closed for Ascension Day holiday and trade will resuming on Friday.
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