JAKARTA: Malaysian palm oil futures dropped for the second consecutive session on Monday, tracking rival vegetable oils on Chicago and Dalian exchanges, though stronger crude prices and a softer ringgit capped losses.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 9 ringgit, or 0.19percent, to 4,663 ringgit (USD1,142.05) a metric ton at closing. The contract traded in a tight range between 4,642 ringgit and 4,720 ringgit, after dropping 4.61percent last week.
A Kuala Lumpur-based trader said the contract was supported by strong crude oil and a weaker ringgit —its currency of trade — “but weak Dalian and Chicago oils cap gains.”
Dalian’s most-active soyoil contract fell 0.84percent, while its palm oil contract lost 1.6percent. Soyoil prices on the Chicago Board of Trade ticked down 0.24percent. Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Brent crude rebounded more than 3percent on Monday after US President Donald Trump rejected a peace deal from Iran to resolve their conflict and reopen the Strait of Hormuz. Stronger crude oil futures make palm a more attractive option for biodiesel feedstock. The ringgit, palm’s currency of trade, eased 0.25percent against the dollar, making the commodity slightly cheaper for buyers holding foreign currencies.
Palm oil may extend losses into a range of 4,588-4,622 ringgit per ton, as suggested by a projection analysis, Reuters technical analyst Wang Tao said.
Exports of Malaysian palm oil products for September 1-25 likely fell between 15.1percent and 24.3percent from a month earlier, cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia said. Indonesia’s palm oil exports in July stood at 3.19 million metric tons, down 9.87percent from the same period of last year, palm oil association GAPKI said on Monday.