Palm oil falls on profit-taking, stronger ringgit and weaker rivals

Malaysian palm oil futures fell on Tuesday amid profit-taking, while a stronger ringgit and weaker rival edible oils also weighed on the market.

The benchmark palm oil contract FCPOc3 for June delivery on the Bursa Malaysia Derivatives Exchange edged down 10ringgit, or 0.24%, to 4,237 ringgit ($898.24) a metric ton at closing, the lowest close in two days.

The contract closed down from an intraday high of 4,280 ringgit.

The market is likely “taking a breather… after making hefty gains from a slow rise in production amidst robust exports,” said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

The Malaysian ringgit MYR, palm’s currency of trade, strengthened 0.13% against the dollar. A stronger ringgit makes palm oil less attractive for foreign currency holders.

Investors are now awaiting U.S. consumer confidence and trade figures due out later in the day for further direction.

Rival edible oils suffered bigger declines. Dalian’smost-active soyoil contract DBYcv1 fell 0.54%, while its palm oil contract DCPcv1 lost 0.41%. Soyoil prices on the Chicago Board of Trade BOcv1 decreased 0.35%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

“Palm continues to price itself at a premium to soft oils on account of tight availability,” said Pranav Bajoria, director of Singapore-based brokerage Comglobal Pte Ltd, adding that palm oil’s premium to soft oils is likely to continue to hold in the near term.

Oil was little changed on Tuesday, after rising in the previous session, as investors took a more mixed view toward the loss of Russian refinery capacity after recent Ukrainian attacks, though a slightly weaker U.S. dollar offered some support.

Palm oil may continue to rise towards the resistance levels of 4,400-4,420 ringgit per ton this week, with support at 3,980-4,000 ringgit, LSEG Agriculture Research said in a weekly report published on Monday.

Tags: futures, contract, ringgit, prices, Malaysia, soyoil, palm oil