Palm prices down on weak demand and strong ringgit, but set to gain for a second week

Malaysian palm futures prices were little changed Friday as the weaker demand and stronger ringgit weighed heavily on the market. However, expectations of tighter production provided support.

At midday, the benchmark palm oil contract on Bursa Derivatives exchange for January delivery fell 6 ringgit or 0.14% to 4,149 Ringgit ($1,001.69).

The contract has risen 0.51% in the first 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 the prices are being held at key levels because production is gradually entering lower output months.

Exports of palm oil-based products from Malaysia for the period November 1-20 were estimated to have fallen between 14.1% and 20% compared to a month ago.

The palm ringgit's trade currency strengthened by 0.29% versus 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 in Dalian, fell by 1.03%. Chicago Board of Trade soyoil prices were down by 0.51%.

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

Oil prices fell for the third consecutive session, as the U.S. sought a peace agreement between Russia and Ukraine that could increase oil supplies on the global market. Investors' risk appetite was also curbed by uncertainty about interest rate cuts in the U.S.

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

Technical analyst Wang Tao stated that palm oil could fall between 4,076 and 4,102 ringgits per metric ton due to a wave 5.

(source: Reuters)