Palm oil prices fall on August exports, weaker ringgit

Malaysian palm futures closed lower on Monday after a two session rise. Weaker exports and a stronger Ringgit overshadowed tighter inventories.

The benchmark contract for palm oil delivery in October on Bursa Derivatives Exchange was down 38 ringgit or 1.01% at $3,709 ringgit (US$833.48) per metric ton.

AmSpec Agri Malaysia, an independent inspection company, reported on Saturday that exports of palm oil products from Malaysia between Aug. 1-10 were down 17.7% compared to a month ago.

Intertek Testing Services, another cargo surveyor, reported that exports fell 12.2% during the same time period.

The Malaysian Palm Oil Board's (MPOB) data showed that Malaysian palm oil inventories fell by 5.35% at the end of July compared to the previous month. This was the first decline in four months.

Exports of crude palm oil in the second largest producer of palm oil rose 39.92% and output rose 13.97%.

Lingam Supramaniam is the director of Selangor brokerage Pelindung Bestari. He said: "The macro-vegetable oil market appears weak. This will cap any significant recovery in prices when added to the strength of the ringgit."

Dalian's palm oil contract, which is the most active contract, was flat. Chicago Board of Trade soyoil prices fell by 1.48%.

As they compete to gain a share of the global vegetable oil market, palm oil is affected as well by changes in prices in other oils.

The ringgit (the currency used to trade palm oil) depreciated by 0.5% against the US dollar, after it had risen sharply since mid-July until last week. Palm oil becomes less appealing to foreign currency holders when the ringgit is stronger.

LSEG Agriculture Research stated in a report that the contract could rise this week to the resistance levels between 3,850-3.870 ringgit/ton, with support of 3,680-3,700 ringgit.

(source: Reuters)