Malaysian palm oil futures fell as the ringgit gained over 1 percent against the dollar on Thursday, and on expectations of weaker export data towards the end of February. The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 0.6 percent at 2,598 ringgit ($624.52) per tonne in evening trade, ending the day 1.9 percent lower from its near two-year high of 2,648 ringgit hit on Monday.
Traded volume stood at 42,909 lots of 25 tonnes each. "It's all ringgit play today, and I expect exports on February 20 to come down, but March should see some demand creeping in from the Middle East," said a trader at a brokerage based in Kuala Lumpur. "They have not been buying much in January and February so they need to replenish stocks. March is also the onset of summer, so demand will pick up."
The ringgit, the currency palm oil is traded in, hit a session high of 4.1540 per dollar on Thursday, buoyed by Malaysia's better-than-expected gross domestic product data. A stronger ringgit makes palm oil more expensive for holders of foreign currencies. Malaysian shipments for the first half of February fell 14-16 percent compared with the same period a month ago, according to cargo surveyor data. Exports fell due to weak demand from top palm importers China and India.
Palm oil may retest support at 2,576 ringgit per tonne as its drop from the February 15 high of 2,648 ringgit has not finished yet, according to Wang Tao, Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the Chicago soyoil contract lost 0.3 percent.
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