KUALA LUMPUR: Malaysian palm oil futures edged down in early trade on Wednesday, as the ringgit strengthened further and hit its highest in nearly two years.
The Malaysian currency rose as much as 0.53 percent against the dollar to 3.8550, its highest since April 2016, bolstered by high oil prices and portfolio inflows. It was last up 0.48 percent at 3.8570 per dollar around noon and was headed for a third consecutive sessions of gains.
Gains in the ringgit, palm’s currency of trade, usually weigh on the tropical oil by making it more expensive for holders of foreign currencies.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was down 0.3 percent at 2,423 ringgit ($628.29) a tonne at the midday break, heading for a second straight session of declines.
Palm fell to a one-week low of 2,410 ringgit on Tuesday, and has been range trading around 2,400 ringgit in the last two weeks. It has shed over 5 percent so far this month in what could be its biggest monthly drop since November 2017.
Trading volumes stood at 8,717 lots of 25 tonnes each at the midday break on Wednesday.
Palm oil is seen trading in a range in the medium term until data from the Malaysian Palm Oil Board is released on April 10, said a futures trader from Kuala Lumpur.
“But it’s hard to say (if March stocks will rise or fall on-month), as the surprise lies in exports… and production,” he said.
Malaysian palm oil production is forecast to rise in March from a month earlier, in line with seasonal trend and on the higher number of working days.
Exports are also forecast to rise in March on a monthly basis. Shipments from Malaysia during March 1-25 rose 9 percent-10 percent from the corresponding period in February, according to cargo surveyor data released earlier this week.
Malaysian exports had declined 13.3 percent on a monthly basis to 1.3 million tonnes in February.
In other related oils, the Chicago Board of Trade’s May soybean oil contract fell 0.2 percent, while the May soybean oil on China’s Dalian Commodity Exchange declined 0.7 percent.
The Dalian May palm oil contract was down 0.5 percent.
Palm oil prices are impacted by movements in rival edible oils as they compete in the global vegetable oils market.