KUALA LUMPUR (April 18): Malaysian palm oil futures dropped on Thursday, snapping two sessions of gains as they tracked weaker overnight soyoil on the US Chicago Board of Trade and drew profit taking.
Palm's losses, however, were capped by a weaker ringgit, its currency of trade.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed 1% lower at RM2,183 (US$527) a tonne, its sharpest daily decline in a week.
In the previous trading session, it touched a one-week top of RM2,219 on the back of a weaker ringgit.
"Palm fell today tracking the weakness in external markets, but the weak ringgit capped some losses," said a futures trader in Kuala Lumpur.
The market was also dragged down by profit taking, another trader said.
The ringgit weakened against the dollar this week as investors worried that Malaysia's debt may be removed from a key global bond index, which would trigger fund outflows from the country.
Malaysia could see outflows of almost US$8 billion if its bonds are downgraded by FTSE Russell, a global index provider, Morgan Stanley said in a research note.
The ringgit, which had hit a near three-month low in its previous trading session, was down 0.2% at 4.1410 against the dollar on Thursday evening.
A weaker ringgit makes palm oil cheaper for holders of foreign currencies.
In other related oils, the Chicago May soybean oil contract had fallen 0.9% on Wednesday, but was last up 0.1%.
The May soyoil contract on the Dalian Commodity Exchange dipped 1%, and the Dalian May palm oil contract declined 1.2%.
Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.
Palm, soy and crude oil prices at 1040 GMT
|MY PALM OIL||MAY9||2107||-23.00||2096||2122||368|
|MY PALM OIL||JUN9||2164||-23.00||2147||2184||4195|
|MY PALM OIL||JUL9||2183||-22.00||2164||2200||16861|
|CHINA PALM OLEIN||MAY9||4392||-52.00||4390||4468||69600|
|CBOT SOY OIL||MAY9||28.49||+0.03||28.4||28.54||9310|
|INDIA PALM OIL||APR9||539.00||-2.40||537.60||541.3||292|
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel
(US$1 = RM4.1410)
(US$1 = 6.7030 Chinese yuan)
(US$1 = 69.6025 Indian rupees)