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Palm oil falls from 10-week top on profit taking, ringgit strength
[KUALA LUMPUR] Malaysian palm oil futures fell from a 10-week high on Tuesday as investors cashed in on the recent strength in prices and the ringgit rose, limiting demand for futures.
A stronger ringgit usually makes palm oil more expensive for foreign currency holders, as the ringgit is palm's traded currency.
Palm climbed to its highest since June 7 in the previous session, recording its strongest gains in nearly a year on the back of higher export demand and tracking firmer rival oils.
Benchmark palm oil futures for October on the Bursa Malaysia Derivatives Exchange fell 1.4 per cent to RM2,542 per tonne on Tuesday evening, its sharpest decline since July 8.
Traded volumes stood at 61,873 lots of 25 tonnes each at the close of trade, higher than the 2015 average of 44,600.
"It's profit taking on the back of an overbought market, and the ringgit," said a Kuala Lumpur-based trader, adding that the market may track better performing rival oils on China's Dalian Commodity Exchange.
"If its strength persists, palm will go up."
Palm's price has been influenced by the Dalian market, as they compete for a share of the global vegetable oils market. The January soybean oil contract on the Dalian Commodity Exchange was up 1.7 per cent on Tuesday, while the January contract for RBD palm olein rose 1.8 per cent.
In other related oils, the Chicago Board of Trade soybean oil December contract declined 0.5 percent.
A stronger ringgit also weighed down on palm prices, as it gained 0.6 per cent to reach 3.9830 against the dollar around on Tuesday evening.
Palm oil may stabilise around support at RM2,543 per tonne, and then retest resistance at RM2,610, according to Reuters market analyst for commodities and energy technicals Wang Tao.