Palm oil slips on hopes of higher output, stronger ringgit

KUALA LUMPUR: Malaysian palm oil futures fell slightly on Monday, weighed down by expectations that production in August would rise slightly, and a stronger ringgit .

The ringgit was up 0.2 percent around noon at 4.2650 per dollar, after earlier hitting its strongest level in more than two months.

Gains in the ringgit, the currency of trade for palm oil, typically pressure palm prices by making it more expensive for buyers holding foreign currencies.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was down 0.2 percent at 2,744 ringgit ($643.38) at noon. Earlier in the session, it went as high as 2,766 ringgit.

Traded volumes stood at 10,011 lots of 25 tonnes each at noon.

The market likely declined on expectations of production growth, said a futures trader in Kuala Lumpur, adding this would contribute to the country's growing stockpiles.

However, traders are uncertain about the extent of gains in production.

Another trader said palm prices saw some resistance "in view of the ringgit appreciation."

Palm oil production in July rose 20.7 percent from a month earlier to 1.83 million tonnes, surpassing industry expectations, according to industry regulator data.

The production data for August by the Malaysian Palm Oil Board is scheduled for release on Sept. 11.

In related vegetable oils, the October soybean oil contract on the Chicago Board of Trade rose 0.5 percent, while the January soybean oil on the Dalian Commodity Exchange fell 0.2 percent.

The January palm olein contract on Dalian declined 0.4 percent.

Palm oil prices are impacted by the movements in related edible oils, as they compete for a share in the global vegetable oils market.