KUALA LUMPUR: Malaysian palm oil futures fell for the first time in five sessions on Tuesday, on stronger ringgit and concerns over demand following the cancellation of import contracts by the world’s biggest buyer India.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 20 ringgit, or 0.5%, to 3,957 ringgit ($948.92) a metric ton by mid-day break. The contract rose 6.5% in the past four sessions.
Indian refiners cancelled 100,000 metric tons of palm oil purchases for delivery between October and December, as the government’s move to raise import duties due to a rally in overseas prices prompted them to book profits.
“Indian buyers are backing out of deals, which shows that if prices keep going up, people will switch to different cooking oils,” said a Mumbai-based trader with a global trade house.
The ringgit, palm’s currency of trade, strengthened 0.71% against the U.S. dollar to a near three-year high, making the commodity more expensive for buyers holding foreign currencies.
The upcoming festive season in key importing countries, amid lower inventories, will limit a drop in prices, said Mitesh Saiya, a Mumbai-based trader.Palm oil futures rise on output concerns
Dalian’s most-active soyoil contract rose 0.96%, while its palm oil contract added 0.61%. Soyoil prices on the Chicago Board of Trade were down 0.24%.
Palm oil tracks prices of rival edible oils, as they compete for a share of the global vegetable oils market.
Crude oil prices rose on Tuesday on concerns that the intensifying Israel-Hezbollah conflict may impact supply in the Middle East.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Malaysia’s plantations minister said a proposal to revise the windfall profit levy on the palm oil industry was sent to the finance ministry last week, state news agency Bernama reported on Monday.
Palm oil may test resistance at 4,067 ringgit per metric ton, a break above which could open the way towards 4,120-4,153 ringgit range, Reuters technical analyst Wang Tao said.