Malaysian palm oil futures reached their lowest level in more than four months on Tuesday as the ringgit strengthened, making the tropical oil more expensive for holders of foreign currencies. The ringgit, palm's currency of trade, hit fresh 14-month highs in trade on Tuesday, but later weakened 0.2 percent against the dollar to 4.0660.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 1 percent at 2,563 ringgit a tonne at the end of the trading day, a second straight session of declines. Earlier in the session, the contract fell as much as 1.7 percent to 2,544 ringgit, its lowest since July 24. Traded volumes stood at 48,938 lots of 25 tonnes each in the evening.
"The ringgit continues to strengthen," said a futures trader from Kuala Lumpur. The Malaysian currency has gained over 4 percent since Nov. 1 and about 10 percent so far this year. "Expectations about Malaysia's end-November stockpiles are also bearish," said the trader, as weaker exports last month are seen contributing to rising end-stocks.
Production in Malaysia, the world's second largest producer after Indonesia, rose 12.9 percent in October from a month earlier to hit the 2 million tonne mark, while end-stocks gained 8.4 percent to 2.2 million tonnes. In other related oils, the January soyabean oil contract on the Chicago Board of Trade was down 0.5 percent, while the January soyabean oil contract on the Dalian Commodity Exchange fell 0.8 percent.
Meanwhile, China's Dalian January palm olein contract declined 1.3 percent. Palm oil is impacted by movements in other edible oils as they compete for a share of the global vegetable oils market. Falling production of rapeseed in India, however, could boost demand for palm oil, as India imports about two-thirds of its edible oil demand. India's rapeseed and mustard output is set to drop by at least 10 percent for the 2017/18 crop year as scant rain and high temperatures prompted farmers to switch to other crops. Palm oil may fall into a range of 2,519 ringgit to 2,555 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
Comments
Comments are closed.