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Palm oil drops 5.2% in March as ringgit rises
MALAYSIAN palm oil futures rose on Friday, snapping a three-day losing streak, as the edible oil drew strength from overnight gains in rival soyoil on the US Chicago Board of Trade and on hopes that March exports may have risen from February levels.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was up 0.87 per cent at RM2,425 (S$822.81) a tonne at the close. Trading volumes stood at 15,765 lots of 25 tonnes each.
Palm prices have declined 5.2 per cent in March and 3.1 per cent in the first quarter of the year as top importer India raised import tax on the tropical oil.
Prices could decline further this year as production is expected to rise after a dry weather El Nino phenomenon and as young trees come to maturity and increase harvested areas.
US corn futures jumped nearly 4 per cent on Thursday and soybeans surged more than 2 per cent after the US Department of Agriculture stunned traders by projecting a year-on-year decline in soybean plantings and a larger-than-expected drop in corn acres.
"Palm was following overnight gains in soyoil. The USDA report gave boost to entire soybean complex," said a futures trader based in Kuala Lumpur.
Palm oil is also supported by expectations that March exports may have risen compared with February on account of more working days and lower prices, said a Kuala Lumpur-based dealer.
Exports of Malaysian palm oil products during March 1-25 rose 9.5 per cent to 1,165,833 tonnes from 1,064,823 tonnes shipped during Feb 1-25, inspection company AmSpec Agri Malaysia said on Monday.
The ringgit, palm's currency of trade, was up 0.1 per cent at 3.8620 per dollar around Friday evening, after rising to its highest in nearly two years earlier in the week.
Appreciation in the ringgit usually weighs on palm oil prices by making it more expensive for holders of foreign currencies.
In related oils, the Chicago Board of Trade's May soybean oil contract jumped 1 per cent on Thursday. The May soybean oil on China's Dalian Commodity Exchange rose 1 per cent, while the Dalian May palm oil contract was up 0.48 per cent.
Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market.
Palm oil may drop to RM2,150 per tonne in three months, according to Reuters market analyst for commodities and energy technicals Wang Tao. REUTERS