Malaysian palm oil futures declined in trade on Wednesday evening, tracking weakness in crude oil prices and as traders booked profit after the vegetable oil jumped to a six-week high in the previous session. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 0.2 percent at 2,473 ringgit ($621.36) a tonne at the close of trade.
Palm hit its highest since April 9, at 2,485 ringgit, in intraday trading on Tuesday and closed the session 1.3 percent higher at 2,477 ringgit, tracking gains in crude oil and US soyaoil. Trading volume stood at 30,099 lots of 25 tonnes each on Wednesday evening. Weaker crude oil prices along with profit-taking after Tuesday's gain weighed on palm prices, said a Kuala Lumpur-based trader. However, a weaker ringgit could cap the decline, he said.
Weakness in the ringgit, palm oil's currency of trade, would make the tropical oil cheaper for foreign buyers and lift demand. The ringgit had weakened by 0.4 percent to 3.9800 per dollar by Wednesday evening. Crude oil prices slipped on Wednesday, under pressure from a potential increase in Opec crude output to cool the market's recent rally and cover any shortfalls in supply from Iran and Venezuela.
Palm oil prices track movements in crude oil as the vegetable oil is used for feedstock to produce biodiesel. In other related oils, the Chicago July soyabean oil contract was down 0.1 percent, while the September soyabean oil on China's Dalian Commodity Exchange was trading flat at around 1100 GMT. Meanwhile, the Dalian September palm oil contract edged down 0.3 percent. Palm oil is affected by movements in rival edible oils as they compete for a share in the global vegetable oils market.
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