JAKARTA: Malaysian palm oil futures plunged on Thursday, in their biggest daily loss in two weeks, dragged down by weaker U.S. soyoil prices and a stronger ringgit.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange lost 153 ringgit, or 3.61%, to 4,081 ringgit ($927.50) a tonne.
The contract finished higher in each of the three previous sessions.
“Today our market is following Chicago Board of Trade soyoil leads as well as weaker Dalian palm oils pricing,” a Kuala Lumpur-based trader said, adding that the strengthening in the ringgit would also discourage exports.
Soyoil prices on the Chicago Board of Trade fell 4.69%. Dalian’s most active soyoil contract rose 0.13%, while its palm oil contract fell 0.45%.
The U.S. Environmental Protection Agency’s long-awaited proposal for the increases in the amount of ethanol and other biofuels that oil refiners must blend into their fuel is expected this week. Reuters reported the
planned increase in volumes for the next three years, on Wednesday.
“The reported figure is below market expectations,” a trader said, adding that was putting pressure on U.S. soyoil prices.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The ringgit gained 0.97% against the U.S. dollar on Thursday, firming to a more-than-five-month high. A stronger ringgit makes palm oil less attractive for holders of foreign currencies.
Malaysian palm oil exports in November rose between 1.7% and 5.6% from the month before, according to data from cargo surveyors Intertek Testing Services, Amspec Agri and Societe Generale de Surveillance.
Indonesia set the reference price of its crude palm oil (CPO) at $824.32 per tonne for Dec. 1-15 shipments, a Trade Ministry regulation showed on Wednesday, keeping export tax at $33 per tonne and levy at $85 per tonne.
Palm oil may retest a resistance at 4,329 ringgit a tonne, a break above which could lead to a gain into the 4,400-4,497 ringgit range, Reuters technical analyst Wang Tao said.