Malaysian palm oil futures dipped on Tuesday evening, hitting their lowest in a week and tracking overnight losses in related edible oils such as soyaoil on the US Chicago Board of Trade and China's Dalian Commodity Exchange. A weaker ringgit, however, may curb further declines in palm prices, traders said. The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange dropped 0.5 percent to 2,397 ringgit ($614.14) a tonne at the close of trade in a second consecutive day of declines.
Earlier in the session, the palm oil contract touched 2,391 ringgit, its weakest since April 18. Trading volumes stood at 30,698 lots of 25 tonnes each at the end of the trading day. "Weakness in competing edible oils is weighing on the market," said a Kuala Lumpur-based futures trader. "Depreciation in the local currency, however, may provide support and cushion selling interest," he said, referring to the Malaysian ringgit, palm's currency of trade.
The ringgit has steadily weakened in the past two weeks and shed 1 percent of its value against the dollar since April 11. It was down 0.2 percent at 3.9030 per dollar on Tuesday evening. A weaker ringgit makes palm oil cheaper for holders of foreign currencies. Palm oil may retest a resistance at 2,434 ringgit per tonne, a break above which could lead to a gain to the next resistance at 2,476 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In other related oils, Chicago's July soyabean oil contract posted a decline of 0.8 percent in the previous session, and edged up 0.1 percent on Tuesday. Meanwhile, September soyabean oil on China's Dalian Commodity Exchange slid as much as 1.1 percent, while the Dalian September palm oil contract fell up to 0.8 percent. Palm oil is impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.