Malaysian palm oil futures fell for a second consecutive session on Thursday evening due to a firmer ringgit and concerns over the longer term outlook for production and exports. A stronger ringgit, palm's currency of trade, usually makes the edible oil more expensive for foreign buyers. It gained 0.1% against the dollar on Thursday to a three-day high of 4.1310. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was last down 0.3% at 1,951 ringgit ($472.28) per tonne at the close of trade.
Palm oil looks neutral in a range of 1,944-1,966 ringgit per tonne, and an escape could suggest a direction, said Wang Tao, a Reuters market analyst for commodities and energy technicals. "The ringgit is firm today, and the market is waiting for the Indian budget due tomorrow," said a Kuala Lumpur-based trader, adding that traders were waiting to see if India would amend its import tariffs on edible oils.
India, the world's largest importer of edible oils including palm, is set to reveal a budget on Friday that is expected to cut taxes on business and raise spending in a bid to shore up consumption and faltering economic growth. Last month, an Indian edible oil refiners' association asked Prime Minister Narendra Modi to raise the duty on refined palm oil imports from Malaysia to protect the local industry following a surge in inbound shipments from the Southeast Asian country.
The trader added that in the longer term, Malaysian production is also expected to pick up, weighing concerns on palm export strength. Palm oil production is expected to rise in the second half of the year in line with seasonal trend. Malaysian palm exports last fell nearly 20% in June versus the previous month, according to data from cargo surveyors. In other related oils, the September soyaoil contract on the Dalian Commodity Exchange rose 0.5% and the Dalian September palm oil contract was up 0.2%. Palm oil prices are impacted by movements in related oils, as they compete for a share in the global vegetable oils market.