KUALA LUMPUR: Malaysian palm oil futures reversed the previous session’s gains to fall in early trade on Friday, weighed down by a stronger ringgit while mild-profit taking also set in. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 1.2% to 2,646 ringgit (US$618.44) at the midday break, its sharpest fall in nearly two weeks.
Palm has risen for three consecutive sessions this week, hitting a two-month high in trade on Thursday and is up 2.8% for the week so far. Traded volumes stood at 21,147 lots of 25 tonnes each at noon. “The market fell on a stronger ringgit, which saw quite a sharp increase yesterday,” said a futures trader from Kuala Lumpur. “There’s also some profit-taking, after the recent sharp rally (in palm prices) and weakness in the soybean oil market also contributed to palm’s decline today.” The ringgit, the currency of trade for the tropical oil, has gained 0.3% so far this month, and surged to its strongest in a month against the dollar in trade on Thursday. It was last down slightly by 0.1% at 4.2785 per dollar. Gains in the ringgit typically make palm oil more expensive for holders of foreign currencies.
In other related oils, the October soybean oil contract on the Chicago Board of Trade was down 0.5%, while the September soybean oil on the Dalian Commodity Exchange was down 0.6%. The September palm olein contract fell 0.7%. Palm oil prices are impacted by related edible oils, as they compete for a share in the global vegetable oils market. Palm oil failed to break a resistance zone of 2,675-2,703 ringgit per tonne, and may hover below 2,675 ringgit for a while before rising again, according to Reuters market analyst for commodities and energy technicals Wang Tao.