Malaysian palm oil futures edged down at the end of the trading day on Tuesday as a stronger ringgit and expectations of a rise in output in the coming months weighed on the edible oil's prices. The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 0.1 percent to 2,431 ringgit ($627.27) per tonne. It earlier hit a one-week low of 2,410 ringgit, matching an intraday low hit on March 20.
Trading volumes stood at 48,509 lots of 25 tonnes each on Tuesday evening. "The market is down on a stronger ringgit," said a palm oil futures trader. "Production in March and April is also expected to be high." Gains in the ringgit, palm oil's currency of trade, typically weighs on the tropical oil as it makes it more expensive for holders of foreign currencies.
The ringgit strengthened 0.5 percent against the dollar on Tuesday evening to 3.8755. It earlier rose as much as 0.7 percent to 3.8680, its strongest level in two months. Expectations of higher production for the full month of March and April are also pressuring palm's prices. Output of the edible oil usually gains seasonally around the second quarter of the year before peaking in the third quarter.
Malaysia's full-year output is seen rising to 20.5 million tonnes in 2018, its highest level on record, as crops shake off the lingering effects of a dry weather El Nino phenomenon and as young trees come to maturity and increase harvested areas.
In other related oils, the Chicago Board of Trade's May soyabean oil contract rose 0.2 percent, while the May soyabean oil on China's Dalian Commodity Exchange slipped 0.1 percent. The Dalian May palm oil contract was up 0.1 percent. Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market.
Comments
Comments are closed for this article.