KUALA LUMPUR: Malaysian palm oil fell on Friday evening in a second day of declines, weighed down by a stronger ringgit, its currency of trade.
The market dropped earlier, tracking losses in overnight soyoil on the Chicago Board of Trade and high inventories, but could hold near current levels on expectations of improving demand and weaker output, said a trader.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 0.7 percent to 2,503 ringgit ($618.94) a tonne at the end of the trading day.
Palm oil prices have been trending downwards since November, after India raised import taxes on edible oils to their highest in more than a decade, cutting demand.
Palm oil futures lost 3.8 percent in December, and have shed nearly 20 percent of their value in 2017.
Trading volumes on Friday were at 26,148 lots of 25 tonnes each at the close of trade.
“The ringgit strengthened quite a bit today,” said a futures trader from Kuala Lumpur. A stronger ringgit typically makes palm oil more expensive for holders of foreign currencies and weakening demand.
The ringgit strengthened 0.5 percent against the dollar on Friday evening at 4.0440.
A trader earlier said palm weakened in its earlier session on overnight soyoil losses, but could hold up well on better exports and falling production.
“But December’s end-stocks (are expected to) be the highest of the year,” he said, and that has been putting pressure on prices this month.
Palm oil shipments from Malaysia, the world’s second largest producer after Indonesia, rose about 1 percent during Dec. 1-25 versus a month earlier, showed data released by cargo surveyors
Intertek Testing Services (ITS) and Societe Generale de Surveillance (SGS).
Demand is expected to improve in the coming weeks as key buyer China stocks up ahead of Lunar New Year celebrations.
Malaysian palm oil production is seen declining through the first quarter of next year, in line with seasonal trends. Output fell 3.3 percent to 1.94 million tonnes in November.
In other edible oils, the March soybean oil contract on the Chicago Board of Trade dropped 1.7 percent in its previous session, and was last up 0.2 percent.
May soybean oil on the Dalian Commodity Exchange was down 0.6 percent, while the Dalian January palm oil contract fell 0.3 percent. – Reuters
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