Malaysian palm oil snaps near-3-day gain on weaker veg oils, profit taking
JAKARTA: Malaysian palm oil edged down on Wednesday, tracking declines in competing vegetable oil markets as traders took profits, but supported by weakness in the ringgit.
The benchmark February palm oil contract on the Bursa Malaysia Derivatives Exchange ended down 0.3 percent at 2,245 ringgit ($668) per tonne. The contract is up 1.9 percent so far this week.
Total traded volume on Wednesday stood at 34,564 lots of 25 tonnes, just below the average 35,000 lots.
“One hour before the close weakness in soybean oil influenced Malaysian palm oil,” a trader with foreign commodities brokerage said late on Wednesday.
“The whole day the market was up on the back of the weak ringgit and nothing else. It was the third day up, so there has been a bit of profit-taking.”
U.S. soyoil for December edged down 0.4 percent in late Asian trade on Wednesday, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.4 percent. Both contracts have been trading within relatively tight ranges since early August.
Malaysia’s ringgit eased 0.2 percent to 3.359 per dollar on Wednesday, its weakest level since May 2010. The ringgit has lost 6.6 percent against the dollar since the beginning of September, making palm oil more attractive to international buyers.
“The ringgit weakening to 3.35 has the potential to further encourage exports,” a trader with a foreign commodities brokerage in Kuala Lumpur told Reuters.
Technicals showed palm oil is expected to rise to 2,288 ringgit per tonne as it has cleared resistance at 2,253 ringgit, said Reuters market analyst Wang Tao.
Despite the recent gains, palm oil needs to break past the 2,300 level to exit range trading, traders said.
Palm oil output in Indonesia will rise by only 500,000 tonnes this year, an industry group in the world’s top producer said, lower than a previous estimate due to a longer than usual dry season in key plantation areas. – Reuetrs
Source : The Star