Palm drops by over 2% and posts a weekly loss due to weak demand and a strong ringgit

The price of Malaysian palm oils futures fell by more than 2 percent on Friday. This erased earlier gains and led to a loss for the week, due to weak demand, as well as a strong ringgit.

At the close, the benchmark contract for palm oil delivery in January on Bursa Derivatives exchange fell 87 ringgit or 2.09% to 4,068 Ringgit ($981.19) per metric ton. The contract dropped 1.45% in the past week.

Paramalingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said that the weak demand and strength of the Ringgit put pressure on the prices.

Supramaniam stated that prices are being held at important levels because production is gradually moving into lower output months. Exports of palm oil products from Malaysia for the period November 1-20 were estimated to have fallen between 14.1% and 20% compared to a month ago, according cargo surveyors.

The palm ringgit's trade currency strengthened by 0.19% in relation to the dollar. This made the commodity more costly for buyers who hold foreign currencies.

Dalian's palm oil contract, which is the most active contract, fell by 2.24%. Chicago Board of Trade soyoil prices were down by 1.47%.

Palm oil follows the price movement of other edible oils as it competes to gain a share in the global vegetable oil market. Oil prices dropped more than 1% in a third session, as the United States sought a peace agreement between Russia and Ukraine that could increase global supply. Meanwhile, investors were hesitant to take risks due to uncertainty about interest rates.

Palm oil is less appealing as a biodiesel feedstock due to the weaker crude oil futures.

(source: Reuters)