Palm oil falls for 2nd session on stronger ringgit

Malaysian palm oil futures ended the month with overall gains, but declined on Monday, marking the second consecutive session of losses as a stronger ringgit weighed on sentiment and traders remained cautious as palm continues to be priced at a premium against rival oils.

The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down 53 ringgit, or 1.31%, to 3,998 ringgit ($970.15) a metric ton at the closing.

The contract lost 3.71% in the last two sessions but still gained 0.53% in September.

Palm prices are currently too high compared to rival oils, and they need to get closer to rivals for the palm to compete for demand in the market, Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari, said.

“Palm prices are getting expensive, and many are not rushing to buy, but (investors) would rather wait for better prices since rival oils are also undergoing price corrections,” he said.

However, a stronger ringgit coupled with the upcoming closure of the Dalian Commodity Exchange (DCE) for the holidays is pushing prices down.

The DCE will be closed for China’s Golden Week holiday from Oct. 1 to 7.

The ringgit, palm’s currency of trade, strengthened 0.02% against the US dollar, making the commodity more expensive for buyers holding foreign currencies.

Dalian’s most-active soyoil contract fell 0.02%, while its palm oil contract shed 0.3%. Soyoil prices on the Chicago Board of Trade fell 0.09%.

Palm oil tracks prices of rival edible oils as they compete for a share of the global vegetable oils market.

Cargo surveyors estimate exports of Malaysian palm oil products rose between 0.8% and 1.1% in the month of September.

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Tags: Malaysia, palm oil, futures, benchmark contract, soyoil