Palm oil falls to near five-month low

May 07, 2013

Palm Oil
Palm Oil

Malaysian palm oil futures slipped to nearly a 5-month low on Monday, weighed down as the ringgit surged against the dollar following the ruling coalition’s win in the country’s general elections. The Malaysian ringgit rose on Monday to its highest since September 2011 after the governing National Front coalition extended its 56-year rule, seeing off a strong challenge by an opposition alliance that had unnerved investors because of the potential for political instability.

The stronger ringgit made the palm oil feedstock more expensive for overseas buyers and lowered refiners’ margins, keeping some investors on the sidelines. “The ringgit is strong today, but the stock index is also strong, so the palm oil market is only slightly down. We are still seeing some rangebound trading today,” said a trader with a foreign commodities brokerage in Kuala Lumpur.

Investors also avoided taking risks as they waited for official data on Malaysia’s April palm oil stocks and output levels, due on Friday. The benchmark July contract on the Bursa Malaysia Derivatives Exchange edged down 0.1 percent to close at 2,250 ringgit ($756) per tonne. Prices earlier fell as low as 2,230 ringgit, a level last seen on December 13.

Total traded volumes were thin at 22,837 lots of 25 tonnes each, compared to the average 35,000 lots. Technicals showed a bearish target at 2,160 ringgit has been established, as a downtrend from the March 25 high of 2,505 ringgit has resumed, said Reuters market analyst Wang Tao. Market participants are hoping that the next report on palm oil stocks supports prices, which have lost 7.7 percent so far this year. However, easing exports have raised concern that inventory levels may have fallen only marginally in April and held above 2 million tonnes.

Palm oil stocks in Malaysia, the world’s second largest producer, fell almost 11 percent to 2.17 million tonnes in March from February’s 2.43 million tonnes. In vegetable oil markets, the US soyaoil for July delivery gained 0.6 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange rose 1.9 percent.  Source Reuters

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More