Malaysian palm oil futures extended losses on Thursday due to a drop in related vegetable oils and weak exports, though a weaker ringgit restricted the downside. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was down 0.75% at 2,243 ringgit ($535.32) per tonne at close, after falling 1% on Wednesday. The ringgit, palm's currency of trade, weakened against the dollar by 0.19% to 4.1900, making it more cheaper for foreign buyers.
"With falling ringgit, palm should have been trading on higher side, but weakness in competing oils is not allowing it to rise," said a Kuala Lumpur-based futures trader. The January soyaoil contract on the Dalian exchange fell 1.62%, while the Dalian January palm oil contract dropped 2.23%. Soyabean oil on the Chicago Board of Trade fell 0.53%.
Palm oil stocks were depleting in the last few months but that pace could moderate as exports have started to falter, said a palm oil trader based in Kuala Lumpur. Malaysia's palm oil stockpiles at the end of August declined 5.3% from the previous month to 2.25 million tonnes, industry regulator the Malaysian Palm Oil Board said last week. But exports of Malaysian palm oil products for Sept. 1-15 fell 6.8% to 700,935 tonnes from 752,470 tonnes shipped during Aug. 1-15, cargo surveyor Societe Generale de Surveillance said on Wednesday.
Palm oil may break a support at 2,254 ringgit per tonne and fall to the next support at 2,219 ringgit, Wang Tao, a Reuters market analyst for commodities technicals said. Meanwhile, oil prices rose sharply, supported by supply risks brought about by last weekend's drone attacks on Saudi oil infrastructure and a cut in US interest rates.
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