Palm oil falls over 1pc on profit-taking, stronger ringgit

• Malaysia's palm oil inventories fell to a three-month low in November as a seasonal decline in production curbed yields.
• Dalian's most-active soyoil contract traded 2.2pc higher, while its palm oil contract gained 1.6pc.
• Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

SINGAPORE:  Malaysian palm oil futures reversed gains and fell as traders locked in profit and the ringgit firmed, although weekly prices were the highest in almost three years on supply worries.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange fell 1.3pc to 2,853 ringgit ($684.17) a tonne when the session ended on Friday.

"The prices fell due to a firm ringgit and profit-taking," said a Kuala Lumpur based trader. The ringgit rose 0.5pc against the dollar, making the edible oil more expensive for holders of foreign currencies.

Traders also sought to reap profits from a rally earlier in the week which pushed palm's weekly price to the highest since Feb. 17, 2017 on looming supply shortages in the coming months.

Poor rainfall in top producers Indonesia and Malaysia earlier this year is likely to curb yields of the tropical oil in the first half of 2020, according to traders and analysts.

Malaysia's palm oil inventories fell to a three-month low in November as a seasonal decline in production curbed yields, while exports dropped on slowing purchases by top importers, the industry regulator said on Tuesday.

Malaysia, the world's second-largest producer and exporter of palm oil, raised its export tax for crude palm oil to 5pc for January, marking the first tax hike in one-and-a-half years.

It calculated a reference price of 2,571.16 ringgit ($616.59) per tonne for next month, the Malaysian Palm Oil Board's website said on Friday, citing the national customs department.

Capping the losses, however, were costlier rival oils on the Dalian Commodity Exchange and the Chicago Board of Trade (CBOT).

Dalian's most-active soyoil contract traded 2.2pc higher, while its palm oil contract gained 1.6pc.

Soyoil prices on the CBOT traded 0.7pc higher.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.