Malaysian palm oil futures dipped on Wednesday for their first fall after three straight days of gains, as the market weakened on a stronger ringgit. Palm oil has gained more than 8 percent so far this month, reaching a two-year high of 2,793 ringgit on Tuesday evening, tracking competing vegetable oils and rising on concerns that dry weather from the El Nino climate pattern will cut output.
The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 1.1 percent to 2,749 ringgit ($698) per tonne, its sharpest fall in nearly a month. Traded volumes were 44,823 lots of 25 tonnes each, near a 2015 daily average of 44,600 lots.
"It's primarily ringgit play today. There's also some correction as the market has been going up continuously," said a trader from Kuala Lumpur.
The ringgit gained 1.4 percent to reach 3.9380 against the dollar, its strongest level in seven months, rising along with other emerging Asian currencies on the possibility of slower interest rate hikes in the wake of the Federal Reserve's cautious stance on monetary policy tightening.
A stronger ringgit, in which palm oil is traded, makes it more expensive for foreign currency holders.
Palm oil may retrace to a support at 2,716 ringgit per tonne, as it failed to break a resistance at 2,776 ringgit again, technical analysis by Reuters market analyst Wang Tao showed.
In competing vegetable oil markets, the May Chicago Board of Trade soyoil contract fell 0.1 percent, while the September soybean oil contract on the Dalian Commodity Exchange slid 0.3 percent.
Crude palm kernel oil's offer price slid to 5435.75 ringgit per tonne at noon, down from a five-year high hit on Tuesday evening as traders saw some profit taking, according to price assessments by Thomson Reuters.
A trader however still saw room for prices to rise. "It's not the end of it. It's a buyer and seller market, and people are still buying."
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