Malaysian palm oil futures fell as much as 2 percent in Tuesday evening trade, touching their lowest in more than two weeks, as a stronger ringgit and concerns over a European Union vote to curb palm oil imports dented sentiment. A stronger ringgit, palm's currency of trade, typically makes the edible oil more expensive for foreign buyers and curbs demand. The ringgit climbed to 3.9470, its highest in about 18 months on Tuesday morning before closing flat.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange was down 1.5 percent at 2,518 ringgit ($636.82) a tonne at the close. It had hit 2,493 ringgit, the weakest level since December 29. Trading volumes stood at 59,258 lots of 25 tonnes each.
"It looks like the market is concerned over the developments in Europe now," said one Kula Lumpur trader, referring to Europe's call to curb the use of palm oil in biofuels. A large portion of Europe's palm oil imports are used to make biofuels, but the European Parliament backed a call last April for greater vetting of palm and other vegetable oils used in biofuels in an effort to prevent the EU's post-2020 renewable transport targets from leading to deforestation.
Hundreds of Malaysian palm oil farmers gathered in Kuala Lumpur on Tuesday to protest against the move. The EU Parliament is set to vote on the proposal on Wednesday. Another trader added that a firming ringgit also weighed on the market. The ringgit has been strengthening since the start of 2017.
In related edible oils, the March soyabean oil contract on the Chicago Board of Trade was down 0.3 percent, while May soyabean oil on the Dalian Commodity Exchange edged down by 0.1 percent. The Dalian January palm oil contract fell by 0.7 percent.
Palm oil tracks the performance of other edible oils that compete for a share in the global vegetable oils market.
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