JAKARTA: Malaysian palm oil futures reversed early gains on Tuesday, tracking rival edible oils lower, but a weaker ringgit and slow production in the world’s second-largest producer capped losses.
The benchmark palm oil contract for the September delivery on the Bursa Malaysia Derivatives Exchange closed down 44 ringgit or 1.18%, to 3,675 ringgit ($788.29) per metric ton, ending a two-session rise.
“Palm oil was up (earlier) on the back of firm Dalian and Chicago Board of Trade soyoil markets. Since both the markets eased in the evening session, our market followed it,” said a Kuala Lumpur-based trader.
But production in Malaysia is slow and low, providing some support to the market, the trader said.
Dalian’s most-active soyoil contract rose 0.1% and its palm oil contract gained 0.9%.
CBOT soyoil prices fell 0.89%, giving up early gains as expectations of much-needed rains in parts of the U.S. Midwest eased concerns over dry weather.
Palm oil rebounds on stronger soyoil, but ends week lower
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Exports of Malaysian palm oil products for June 1-25 fell between 4.5% and 8.7% from a month earlier, cargo surveyor Intertek Testing Services and independent inspection company AmSpec Agri Malaysia said.
“Exports will be lower this month, but the focus now is on weather,” the trader said, adding that stock build-up would be hit if the production is disrupted.
The ringgit weakened 0.17% against the dollar, making palm more attractive for buyers holding foreign currencies.
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