KUALA LUMPUR: Malaysian palm oil futures dropped on Thursday, in line to snap two sessions of gains, tracking weaker soyoil on the US Chicago Board of Trade and on profit-taking. Palm's losses, however, were capped by a weaker ringgit , its currency of trade.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 2,191 ringgit ($528.97) a tonne at the midday break.
In the previous trading session, it touched a one-week top of 2,219 ringgit on the back of a weaker ringgit.
"Palm fell today tracking the weakness in external markets, but the weak ringgit capped some losses," said a futures trader in Kuala Lumpur. The market was also down on profit-taking, another trader said.
The ringgit weakened against the dollar this week as investors worried the country's debt may be removed from a key global bond index, which could see billions of dollars leave its shores.
Malaysia could see outflows of almost $8 billion if its bonds are downgraded by FTSE Russell, a global index provider, Morgan Stanley said in a research note.
The ringgit, which had eased to a near three-month low in its previous trading session, was down 0.2 percent to 4.1420 against the dollar around noon on Thursday.
A weaker ringgit makes palm oil cheaper for holders of foreign currencies. In other related oils, the Chicago May soybean oil contract fell 0.9 percent on Wednesday, and was last slightly down 0.1 percent.
The May soyoil contract on the Dalian Commodity Exchange dipped 0.4 percent, and the Dalian May palm oil contract gained 0.1 percent.
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