Palm down tracking weaker related oils, stronger ringgit

KUALA LUMPUR: Malaysian palm oil futures on Friday were poised for a third session of declines in four, weighed down by weaker performing related vegetable oils and a stronger ringgit, palm's currency of trade.

Crude oil prices extended its losses on Friday, following a near 5 percent plunge the day before, as pledged output cuts at an OPEC meeting came in lesser than expected.

Palm oil, as well as related vegetable oils such as soyoil on the Chicago Board of Trade and China's Dalian Commodity Exchange, tracked losses in the oil market, as they are used as feedstock for making biodiesel, a fuel alternative to crude oil.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 1.3 percent at 2,572 ringgit ($601.64) a tonne at the midday break.

Palm is also down 1.1 percent for the week, its sharpest weekly drop since April 14.

Traded volumes stood at 14,877 lots of 25 tonnes each at the midday break on Friday.

"Oil prices didn't go up despite the cuts, plus the ringgit currency is also weakening the market," said a trader from Kuala Lumpur, explaining the factors for palm's decline.

The ringgit gained 0.1 percent against the dollar on Friday noon, after hitting its highest in more than six months in the previous session. A strong ringgit usually makes palm oil more expensive for holders of foreign currencies.

Palm oil is expected to retest a support at 2,567 ringgit per tonne, a break below which could cause a further loss to the next support at 2,539 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.

In other related vegetable oils, soybean oil on the Chicago Board of Trade dropped as much as 0.6 percent, while the September soybean oil contract on the Dalian Commodity Exchange was down up to 1.6 percent.