Malaysian palm oil futures prices slipped back on Wednesday as traders reacted to a stronger ringgit, reversing on gains made in the previous session. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange lost 0.8 percent to 2,744 ringgit ($647.63) a tonne. Traded volumes stood at 48,216 lots of 25 tonnes.
On Tuesday the price had broken four straight sessions of losses and rose 2.25 percent, registering its biggest gain since July 25. A futures trader based in Kuala Lumpur said palm oil slid as a strengthening in the ringgit caused traders to be wary. "Market was lacklustre in the second-half of trading but tumbled towards the close due to ringgit strengthening quite steeply," the trader said.
A stronger ringgit makes the oil price less attractive to buyers holding foreign currencies. Data released from the Southern Peninsula Palm Oil Millers' Association (SPPOMA) on Wednesday, showing a drop of 33.45 percent in production for September 1-5, did nothing to allay concerns over the ringgit's performance as traders look forward to export and production figures later in the month.
"Some traders have also taken the opportunity to cash out when palm hit the 2,775 ringgit intra-day high today," another Kuala Lumpur-based trader said. Market participants have been expecting output to rise in the coming months. Demand for palm is also expected to strengthen ahead of October when two key festivities take place in China and India. Soyabean oil on the Chicago Board of Trade (CBOT) rose 0.1 percent. The most active soyabean oil contract on the Dalian Commodity Exchange was up 0.2 percent. The January palm olein contract on Dalian was also up 0.7 percent.