Palm ends two-day gains with firmer Ringgit

The market for Malaysian palm oils futures ended two sessions of gains in a row on Wednesday as the ringgit strengthened, making the commodity more costly to buyers who hold foreign currencies.

At the close, the benchmark contract for palm oil delivery in January on Bursa Derivatives exchange fell 12 ringgit or 0.29% to 4,125 Ringgit ($976.56) per metric ton. The contract has risen 0.61% over the last two sessions.

David Ng said that the market was lower due to the stronger ringgit, a proprietary trading at Kuala Lumpur based trading firm Iceberg X Sdn. Bhd.

As of 1030 GMT the ringgit (palm's currency) strengthened by 0.07% to reach 4.133. This was its highest level for a year.

Dalian's soyoil contract with the highest volume of trading rose by 0.44% while palm oil contracts fell by 0.09%. Chicago Board of Trade soyoil prices were down by 0.2%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.

Oversupply on the market weighed down oil prices, but expectations of a boost in demand from the end of the longest U.S. Government shutdown ever curbed the losses.

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

Trade and industry officials have said that Malaysia's crude oil palm production will surpass 20 million metric tonnes for the first time by 2025. This is due to favorable weather conditions, an improved labour supply and new, higher-yielding plantations.

An official from the Energy Ministry said that Indonesian biodiesel consumption reached 12,25 million kilolitres as of November 10, this year, of palm oil fatty acid methyl esters.

The Chinese state-trader COFCO, through its oilseed unit, has signed agreements with Brazilian producers to buy soybeans, palm oil, soybean oil and other agricultural commodities totaling nearly 20 million tonnes worth more than $10 billion.

(source: Reuters)