Malaysian palm oil futures fell on Wednesday evening after two sessions of gains, tracking weaker rival oilseed soya, though tight supplies because of lower output curbed further losses. Benchmark palm oil futures for March delivery on the Bursa Malaysia Derivatives Exchange were down 0.7 percent at 3,141 ringgit ($699) a tonne on Wednesday evening, their biggest daily pct drop since December 29.
Palm had climbed to a two-week high on Tuesday, lifted by slow output and a weaker ringgit, which makes the tropical oil cheaper for foreign currency holders. Traded volumes stood at 32,568 lots of 25 tonnes each at the end of the trading day. "The issue is that the soyabean complex is weak, and the palm oil to soyabean oil spread is narrow," said one Kuala Lumpur futures trader, adding that floods in Malaysia's east coast states of Kelantan and Terengganu could hit output and lift prices. "However, palm prices moving up further is hard unless soyabean oil shows some strength, as tight supplies are priced in already." Palm oil prices track the movements of soyaoil because they compete for a share in the global vegetable oils market. The CBOT March soyabean oil contract was up 0.3 percent, but the May contract on the Dalian Commodity Exchange dropped as much as 1.8 percent. Technical analysis showed that palm oil could target 3,219 ringgit, Reuters market analyst Wang Tao said. In other related edible oils, the May contract for Dalian palm olein fell 1.7 percent.