Malaysian palm oil futures dropped for a second straight session on Monday due to slow-moving demand amid higher production, although a weaker ringgit, higher crude oil prices and improving exports limited falls. The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange had fallen 1.8 percent to 2,301 ringgit ($525.22) a tonne by the end of the trading session.
"There's external weakness to the market, production is still high and demand is slow moving," said a trader based in Kuala Lumpur. "This is despite a weak ringgit and better export numbers." Export data from cargo surveyors showed gains of 2-4 percent for the first 15 days of November compared with a month before.
Palm usually finds support from a weaker ringgit, the currency it is traded in, as this makes the vegetable oil cheaper for holders of foreign currencies. The ringgit lost 0.3 percent against the dollar on Monday. Crude oil futures rose as France launched large-scale air strikes against Islamic State in Syria. Palm oil normally takes price direction from crude oil, as vegetable oils are increasingly used in making renewable fuels.
Traded volume stood at 66,867 lots of 25 tonnes each, more than the average 35,000 lots usually traded in a day. Palm oil may retest support at 2,219 ringgit per tonne, as indicated by its wave pattern and a Fibonacci projection analysis, said Wang Tao, a Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the US December soyoil contract lost 0.4 percent, while the January soybean oil contract on the Dalian Commodity Exchange fell 0.5 percent.