Malaysian palm oil futures fell over 2 percent on Thursday evening, as a stronger ringgit and concerns of smaller than expected production declines weighed on the market. Gains in the ringgit, palm's currency of trade, usually makes the tropical oil more expensive for foreign buyers. The ringgit had strengthened 0.4 percent to 3.9850 per dollar in the evening, trading in range of its strongest levels in 16 months.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange was down 2.1 percent at 2,567 ringgit ($644.17) a tonne at the end of the trading day, its sharpest daily decline in nearly two months. Trading volumes stood at 51,278 lots of 25 tonnes each at the close of trade.
"Palm is down on the ringgit, and the market is expecting production to come in," said a trader from Kuala Lumpur, clarifying that while January output is expected to fall month-on-month, the decline will not be as sharp as forecast earlier. Malaysia production in December fell 5.6 percent to 1.8 million tonnes, but was at its highest December level since at least 2000, data from industry regulator Malaysian Palm Oil Board showed earlier this week.
Meanwhile, end-December inventories rose 7 percent on-month to a more than two-year high of 2.7 million tonnes. Palm was also earlier down on overnight falls in soyaoil on the Chicago Board of Trade. Palm oil tracks the performance of other edible oils, as they compete for a share in the global vegetable oils market.
The March soyabean oil contract on the Chicago Board of Trade dropped 0.7 percent in the previous session, and was down 0.2 percent on Thursday. In other related edible oils, the May soyabean oil on the Dalian Commodity Exchange was down 0.2 percent, while the Dalian January palm oil contract also declined 0.2 percent.
Comments
Comments are closed for this article.