KUALA LUMPUR: Malaysian palm oil futures declined on Wednesday, as better offers from larger producer Indonesia and a strengthening ringgit weighed.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange slid 25 ringgit, or 0.64% to 3,872 ringgit ($833.58) by midday.
A major reason behind the decline in prices was the aggressive offers from neighbouring Indonesia, the world’s biggest palm oil producer and exporter, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
“The ringgit is also somewhat strengthening, putting pressure to the already fragile exports.”
The ringgit rose 0.54% against the dollar, making the commodity more expensive for buyers holding foreign currency.
In related oils, Dalian’s most-active soyoil contract was down 0.02%, while its palm oil contract fell 1.13%.
Soyoil prices on the Chicago Board of Trade were down 0.4% after an overnight surge on expectation that hot and dry weather in Brazil would reduce soybean yields in the world’s top producer.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Oil moved in a narrow range on Wednesday as investors turned cautious ahead of a crucial OPEC+ meeting on
Thursday to decide output policy in the next months, while a supply disruption in the Black Sea provided a floor for prices. O/R Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Palm oil may bounce into a range of 3,935 ringgit to 3,953 ringgit per metric ton, Reuters technical analyst Wang Tao said.