Palm oil falls due to Dalian Oil's weakness; soft ringgit caps losses

The Dalian Commodity Exchange saw a decline in the price of vegetable oil, which pushed down the palm oil futures for the second session running. However, a weaker currency helped to limit the losses.

By midday, the benchmark contract for palm oil delivery in June on Bursa Derivatives Exchange had fallen 35 ringgit (0.8%) to 4,340 Ringgit ($979.02).

The contract follows weak external markets, but the ringgit's weakness cushions some losses," said Kuala Lumpur based trader.

Dalian's palm oil contract, which is the most active contract, fell 1.34% while soyoil prices dropped by 1.2%. Chicago Board of Trade Soyoil Prices barely changed, with a 0.02% increase.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the prices of competing edible oils.

The Malaysian Ringgit, which is the currency of the contract, dropped 0.32% in relation to the U.S. Dollar. Palm is more appealing to foreign currency holders when the ringgit is weak.

According to cargo surveyors, the exports of Malaysian products containing palm oil between March 1-20 dropped from 5% to 14.2% on a monthly basis. ($1 = 4.4330 ringgit)

(source: Reuters)