JAKARTA: Malaysian palm oil futures fell on Thursday, tracking weakness in Dalian vegetable oils and Chicago soyoil, while concerns about demand amid a strong ringgit added pressure.
The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange lost 17 ringgit, or 0.4%, at 4,208 ringgit ($1,066.94)a metric ton at closing.
“The market is currently finding a base; the stronger ringgit is of not much help. So far, demand is a concern, especially so for the forward months,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Malaysian ringgit, the contract currency of trade, hit its strongest since April 2018 on January 28 and has strengthened against the U.S. dollar in recent months, making palm more expensive for foreign currency holders. On Thursday, the ringgit eased 0.38% against the dollar.
“However, lower production in January, which will also spill into February, will undergird palm prices,” said Supramaniam.
Dalian’s most-active soyoil contract was down 0.52%, while its palm oil contract lost 1.35%. Soyoil prices on the Chicago Board of Trade slightly change, down 0.05%.
Palm oil tracks the price movements of rival edible oils, as it competes for a share of the global vegetable oils market.
Malaysia’s palm oil inventories are set to end a 10-month rising streak in January, as exports jumped during a seasonal slowdown in production, a Reuters survey showed.
Palm oil looks neutral in a range of 4,201-4,254 ringgit per metric ton, and an escape could suggest a direction, said Reuters technical analyst Wang Tao.
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