Palm Futures Dip as Ringgit Rallies

Malaysia palm oil futures fell yesterday as the stronger ringgit and

reports of higher production last month weighed on sentiment.

Profit-taking across many commodities also pressured palm oil, which

lost 5 per cent in the first quarter of 2010 because of expectations

for a bumper soy crop and the growing strength of the ringgit against

the US dollar.

“The ringgit is going great guns and we have market players either

staying away or unwinding positions,” said a trader with a local

commodities brokerage.


The benchmark June crude palm oil contract on the Bursa Malaysia

Derivatives Exchange ended down 0.4 per cent at RM 2,520 after dropping

to as low as RM2,498, a level unseen since February 5. Traded volume

surged to 18,000 lots of 25 tonnes each from the usual 10,000 lots.

The ringgit rose 0.6 per cent to 3.210 per dollar, eating into

refiner margins as crude palm oil feedstock for refined products is

priced in the Malaysian currency.

Another trader said a report by a palm oil industry group in the

key producing state of Johor showed regional output rose 18 per cent in

March as oil palms recovered from yield stress and drier weather gave

way to rains.


Southern Johor state accounts for a fifth of Malaysia’s total

production.

Vegetable oil markets are watching a brewing trade dispute between

China and Argentina. Argentina’s government urged China on Monday to

suspend a measure affecting imports of Argentine soybean oil in a trade

spat that threatens a key hard currency earner for the South American

nation.

Source : Business Times

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