Palm oil sheds early gains

Malaysian palm oil futures erased earlier gains to end the trading day slightly lower on Wednesday evening, tracking overnight losses in soyaoil on the Chicago Board of Trade. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 0.1 percent to 2,747 ringgit ($651) a tonne at the close of trade, its third drop in four sessions.
Traded volumes stood at 54,832 lots of 25 tonnes each in the evening. Palm oil prices were tracking overnight CBOT soyaoil prices, according to futures traders from Kuala Lumpur: "Weakness in the local currency could, however, cushion the selling pressure," one trader said. A weaker ringgit, the currency of trade for palm oil, usually makes palm oil cheaper for holders of foreign currencies. The currency slipped as much as 0.36 percent to 4.2200 per dollar, its weakest in nearly three weeks.
Another trader said in the evening that he expected the market to be "range trading", as investors are concerned that output could be lower than anticipated. Palm oil production typically rises in the third and fourth quarters of the year, usually peaking in August or September. Output this September however could be lower due to some national public holidays, traders said.
The December soyabean oil contract on the Chicago Board of Trade gained up to 0.3 percent after closing down 1.6 percent in its previous session on better-than-expected yield reports from the US midwest. Palm oil prices slided after the US Environmental Protection Agency said it was seeking comments on a proposal to reduce biodiesel blending requirements into the domestic fuel supply. Soyaoil is the primary feedstock for soya-based biodiesel fuel.
In other related oils, the January soyabean oil contract on the Dalian Commodity Exchange fell as much as 0.4 percent, while the January palm olein contract climbed up to 0.7 percent. Palm oil prices are impacted by the performances of related edible oils as they compete for a share of the global vegetable oils market.