KUALA LUMPUR: Malaysian palm oil futures hit a six-month low in early trade on Friday and were headed for a third consecutive session of declines, weighed down by a stronger ringgit.
The ringgit, palm oil's currency of trade, hit a five-month high at 4.3960 per dollar and was last up 0.3 percent at 4.4000. A stronger ringgit makes the tropical oil more expensive for holders of other currencies.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was down 0.3 percent at 2,559 ringgit ($581.59) a tonne at the midday break. Earlier in the session, it fell to a low of 2,551 ringgit, the weakest since Oct. 10, 2016.
Traded volumes stood at 21,913 lots of 25 tonnes each at noon.
Apart from the ringgit's strength dampening demand for the vegetable oil, a narrowing spread between palm and soyoil also prompts buyers to switch to soyoil, said traders.
"The narrowing spread between soybeans and palm could be pressuring the market," said a Kuala Lumpur-based futures trader.
Palm oil prices are impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.
Soybean oil on the Chicago Board of Trade was last up 0.1 percent, while the September soybean oil contract on the Dalian Commodity Exchange rose 0.1 percent.
Palm has shed 3.8 percent so far this week, heading for its third weekly decline in four, as traders sold throughout the week on forecasts of rising output.
Production in the world's second largest producer after Indonesia is seen rising in line with seasonal trend, and as the effects of a crop damaging El Nino wear off.
Data from industry regulator showed that output in March rose 16.3 percent on month, the first monthly gain since September and higher than the past five-year average for March growth.
In other related vegetable oils, the September contract for palm olein was down 0.2 percent.
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