Palm drops due to ringgit strength and is on track for a weekly loss
Malaysian palm futures fell on Friday due to a stronger ringgit, as well as the weakness of rival Dalian edible oil. They were on course for their first loss in three weeks.
By midday, the benchmark palm oil contract on Bursa Derivatives Exchange for February delivery fell 15 ringgit or 0.37% to 4,048 Ringgit ($989.01), a metric tonne. The contract has fallen 2.50% this week.
A Kuala Lumpur based trader said that the weakening of rival oils,?coupled with an increased ringgit,?pressured palm prices today.
The most active palm oil contract on the?Dalian Commodity Exchange fell 1.18%, while soyoil prices dropped by 0.2%. The Chicago Board of Trade's soyoil price fell 0.02%.
As it competes to gain a share in the global vegetable oil market, palm oil monitors price changes of competing edible oils.
Two traders reported that China's stockpiler of state reserves Sinograin had sold most of the soybeans in an auction. This cleared room for an expected U.S. influx amid an abundance of local supplies.
The palm ringgit's currency has strengthened by 0.37% against U.S. dollars, making it?more costly for holders of foreign currencies.
The price of oil rose on the back of fears that the U.S. would intercept more Venezuelan oil tanks, but it remained on course for a weekly drop amid optimism about a possible peace deal between Russia and Ukraine.
Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.
AmSpec Agri Malaysia, an independent inspection company, reported that exports of Malaysian palm oil products fell 10.3% between December 1-10 compared to a month ago. Intertek Testing Services reported a?15% drop in exports for the same time period.
According to Wang Tao, technical analyst, palm oil could retest the support level of 4,023 Ringgit per ton. A break below this mark would trigger a drop to 3,971 Ringgit.
(source: Reuters)
