Malaysian palm oil futures declined to their lowest levels in nearly two weeks on Wednesday evening, as the ringgit recovered from a one-week low against the dollar and as traders cashed in on slow exports and improving output. A stronger ringgit, the currency palm oil is traded in, makes the vegetable oil more expensive for foreign currency holders. The ringgit rose 0.3 percent to trade at 3.91 to the dollar in the evening, having slumped to its lowest level in a week to 3.9495 on Tuesday following news of a Malaysian state-fund defaulting on a bond interest payment.
The palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 1.6 percent to 2,633 ringgit ($673) per tonne at the close of trade, its second session of declines this week. Palm earlier hit an intraday low of 2,630 ringgit, its lowest level since April 15, and has declined 0.6 percent so far this week. Traded volumes were 51,472 lots of 25 tonnes each, compared with a 2015 daily average of 44,600.
"Palm is taking a cue from weaker exports and good production to cash in on the high price," a Kuala Lumpur based trader said, apart from the stronger ringgit. Export demand for Malaysian palm oil products recorded little to no growth during April 1-25 compared with the same period a month ago, according to cargo surveyor data.
Indonesia, the world's largest palm producer, reported a 24 percent decline in its palm and palm kernel oil exports in March compared with the previous month. In competing oils, the September soybean oil contract on the Dalian Commodity Exchange fell 0.2 percent, while the May Chicago Board of Trade soyoil contract lost 0.4 percent. The offer price for crude palm kernel oil stood at 4795.03 ringgit per tonne in the evening, according to price assessments by Thomson Reuters.
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