MUMBAI: Malaysian palm oil futures erased early gains to end lower on Friday as a recovery in production offset the weakness of the Malaysian ringgit and expectations of improved demand after the prices of rival soft oils rallied more than palm oil this week.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 8 ringgit, or 0.21%, at 3,886 ringgit ($825.05) metric ton after rising to 3,932 ringgit earlier in the day.

Malaysia’s palm oil production is expected to jump in May, even though exports were weak in the first three weeks of the month, said a Mumbai-based trader.

Malaysian palm oil exports for May 1-20 fell between 8.3% and 9.6% from the month before, according to cargo surveyors.

“Until a few weeks ago, palm oil was losing market share due to its premium over soyoil and sunflower oil,” said a New Delhi-based trader.

“It has started regaining market share now that it is available at a discount to rival oils.”

Malaysian palm oil ends lower as weaker exports weigh

Soyoil, sunflower oil and rapeseed oil prices jumped this week on production concerns, he said.

U.S. soybean oil futures were up 0.22% on Friday morning.

Soybean farmers in Brazil’s southernmost state, where rain and flooding have disrupted field work for weeks, have now harvested 91% of their soy area, up from 85% last week, crop agency Emater said on Thursday.

Malaysian ringgit depreciated significantly this week, which is also helping exporters to increase prices, said a Kuala Lumpur-based trader.

“Exports would improve in coming weeks from Malaysia and Indonesia,” the trader said.

The Malaysian ringgit, palm’s currency of trade, weakened 0.17% against the dollar. A weaker ringgit makes palm oil more attractive for foreign currency holders.

Palm oil still targets a range of 3,812 ringgit to 3,832 ringgit per metric ton, as a downward wave looks incomplete, according to Reuters’ technical analyst Wang Tao.

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