Malaysian palm oil futures have reversed gains due to sluggish export demand and a stronger ringgit. – The Malaysian Insider file pic, March 10, 2016.Malaysian palm oil futures reversed gains to fall from a near three-week high on Thursday evening, due to sluggish export demand and a stronger ringgit.
The ringgit gained 0.8% in evening trade to touch 4.0900 against the dollar.
Palm oil becomes more expensive for holders of foreign currencies on a stronger ringgit, the currency palm oil is traded in.
The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange lost 0.4% to RM2,548 per tonne at the end of the trading day, after earlier reaching an intra-day high of RM2,577.
Traded volume stood at 45,453 lots of 25 tonnes each on Thursday. The market had earlier rallied as leading analysts at a Kuala Lumpur conference forecast lower output due to the crop- damaging El Nino phenomenon. February output from Malaysia, the world's second largest producer of palm oil, fell to a nine-year low of 1.04 million tonnes, declining 7.7% from a month ago, data from the Malaysian Palm Oil Board (MPOB) showed on Thursday.
"February's end-stocks were within trade expectations, demand has yet to improve," said a trader from a brokerage firm in Kuala Lumpur.
There was a rise in exports for the first 10 days of March, but it is against a low base during the same period in February due to the Lunar New Year celebrations, said the trader, adding that the stronger ringgit led to some speculative selling in the market.
Export data from two cargo surveyors showed shipments rising to 327,551 tonnes in the first 10 days of March.
"Cargo surveyor export data is not exciting... At this rate, for the full month of March we will reach 1 million tonnes only," said another trader.
The El Nino brings scorching heat across Southeast Asia, reducing palm yields and lowering output in top producers Indonesia and Malaysia.
Industry experts at the Kuala Lumpur conference see the weather phenomenon lifting palm's benchmark prices to RM2,700-RM3,000 a tonne.
In competing vegetable oil markets, the May soybean oil contract on the Dalian Commodity Exchange rose 0.3%, while the Chicago soyoil contract was slightly up by 0.03%. – Reuters, March 10, 2016.
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