JAKARTA: Malaysian palm oil futures dropped on Friday after four days of gains as profit-booking and a stronger ringgit weighed on prices, although the benchmark contract was set for a weekly rise amid output concerns.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 1.72% to 3,723 ringgit ($845.18) by the midday break, erasing some of the 7.67% gains over the past four days.
For the week so far, the contract is up 6%, but is on track to post a monthly loss. Palm dropped on “weekend profit-taking, and external markets gradually easing, coupled with a firmer ringgit,” a Kuala Lumpur-based trader said.
Expectations of higher exports may cushion the drop, the trader added.
Cargo surveyors are scheduled to release March exports data later on Friday.
Meanwhile, Malaysia’s palm oil output is expected to decline after a miller’s association estimated a 22.9% decline in output from March 1-25, analysts said.
Dalian’s most-active soyoil contract were trading 1.09% higher, after gaining as much as 2.06% earlier in the session, while its palm oil contract rose 0.45%.
Soyoil prices on the Chicago Board of Trade dropped 0.53%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Malaysian ringgit gained 0.29% against the US dollar on Friday.
A stronger ringgit, in which the palm contract is traded, could make it more expensive for holders of dollar.
Palm oil may extend gains to 3,853 ringgit per tonne, to complete a bounce from 3,500 ringgit, Reuters technical analyst Wang Tao said.