June 29, 2018 / 5:53 AM / 8 months ago

Vegoils: Palm oil set to snap two days of gains on stronger ringgit

KUALA LUMPUR (Reuters) - Malaysian palm oil futures fell in the first half of trade on Friday, easing from a two-week high hit in the previous session, on pressure from a stronger ringgit.

FILE PHOTO: A truck carrying oil palm fruits passes through Felda Sahabat plantation in Lahad Datu in Malaysia's state of Sabah on Borneo island, February 20, 2013. REUTERS/Bazuki Muhammad/File Photo

The ringgit, palm’s currency of trade, strengthened 0.12 percent to 4.0350 against the dollar on Friday noon. A stronger local currency typically makes palm oil more expensive for holders of foreign currencies.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.5 percent at 2,332 ringgit ($577.94) a tonne at the midday break, in line to snap two days of gains and is up 2.1 percent so far this week.

Palm, however, is down 4 percent on-month, and has shed 6.8 percent since the start of the year.

Trading volumes stood at 14,304 lots of 25 tonnes each at noon.

A stronger ringgit was weighing on palm today, and the market was also taking profits after recent gains, a Kuala Lumpur-based futures trader said.

“Overall though demand looks bad, hence sentiment is still bearish,” he added.

Demand for palm oil has waned in recent weeks, with Malaysian shipments declining 12.6-14.1 percent in the June 1-25 period versus the previous month, reported cargo surveyors.

Leading industry analyst Dorab Mistry said at a seminar in Jakarta on Thursday that a slowdown in Indian demand, due to higher import duties and Malaysia’s reinstatement of a crude palm oil export tax, had contributed to the recent fall-off in prices.

India, the world’s top buyer of palm oil, is expected to only import 500,000 tonnes in June, down from the usual 800,000-850,000 tonnes range, Mistry said.

In other related oils, the Chicago December soybean oil contract slipped 0.2 percent, while September soybean oil on China’s Dalian Commodity Exchange was up 0.5 percent.

Meanwhile, the Dalian September palm oil contract rose 1.3 percent.

Palm oil prices track the performance of other edible oils, as they compete for a share in the global vegetable oils market.

Reporting by Emily Chow; editing by Sunil Nair

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