Stronger Ringgit Weighs on Palm Oil Futures

Malaysian palm oil futures fell 1.1 per cent yesterday as the
stronger ringgit currency offset earlier crude oil-driven gains.

Commodities

across the board were up on the weaker US dollar but palm oil erased

its gains made in the morning session as the Malaysian currency hit a

21-month high, chewing into refiner margins.

“Crude oil’s

18-month high has been forgotten. Traders appear to be veering towards

the support levels of RM2,500 rather than aiming for resistance level of

RM2,600,” said a Malaysian trader.

The benchmark June crude palm oil contract on the Bursa Malaysia

Derivatives Exchange fell RM29 to settle at RM2,530 after rising as

high as RM 2,588.

Traded volume rose to 17,008 lots of 25 tonnes

each from the usual 10,000 lots, suggesting that traders were booking

profits.

Malaysian ringgit surged nearly half a per cent to a

21-month high of 3.2340, riding on global inflows to Asia as it catches

up with other bullish Asian peers.

The stronger ringgit usually

eats into refiner margins, as crude palm oil feedstock for refined

products is priced in the Malaysian currency.

Traders said

Chinese buying was very limited because of a public holiday in the

world’s second largest vegetable oil consumer.

Vegetable oil

markets are also eyeing developments from a brewing trade dispute

between China and Argentina.

Source : Business Times

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