JAKARTA: Malaysian palm oil futures closed down on Friday, snapping a four-session rally, dragged by weakness in Dalian’s soyoil and lower crude oil prices.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange fell 68 ringgit or 1.70%, to 3,930 ringgit ($840.10) a metric ton on its closing. The futures gained 3.37% compared to last week.
“Profit taking is happening after this week’s rally backed by Dalian and CBOT soyoil even though the fundamentals maintain, including better export and slower production. Point to note is the continued weakness on crude oil,” a Kuala Lumpur-based trader told Reuters.
Soyoil prices on the Chicago Board of Trade (CBOT) were up 0.72%. Dalian’s most active soyoil contract fell 1.89%, while its palm oil contract declined 1.60%.
Palm closes down tracking Chicago soyoil, profit-taking weighs
Soybean prices impact the cost of soyoil, which competes with palm oil for a share of the global vegetable oil market.
Oil prices were little changed on Friday but on track for their fourth straight week of losses after tumbling about 5% to a four month-low on Thursday on worries over global demand.
Stronger crude oil futures make palm oil a more attractive option for biodiesel feedstock.
Indonesia set its crude palm oil reference price at $750.54 per ton for the Nov. 16-Nov. 30 period, up from $748.93 for the previous 15-day period.
According to independent inspection company AmSpec Agri, exports of Malaysian palm oil products between Nov. 1 and Nov. 15 rose 6.4% to 645,590 tons from last month.
Meanwhile, cargo surveyor Societe Generale de Surveillance estimated exports of Malaysian palm oil products for Nov. 1-Nov. 15 at 602,510 tons.
The Malaysian ringgit, palm’s currency of trade, strengthened 0.15% against the dollar. A stronger ringgit makes palm oil less attractive for foreign currency holders.
Palm oil may retest support at 3,935 ringgit per metric ton, a break below which could open the way towards 3,895 ringgit -3,917 ringgit range, according to Reuters’ technical analyst Wang Tao.