Palm slips on lower ringgit; stronger crude oil caps downside
JAKARTA: Malaysian palm oil futures opened lower on Wednesday, tracking weakness in the ringgit, while a stronger crude oil helped limit losses.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost RM18, or 0.45 per cent, to RM3,948 (US$896.25) a metric ton in early trade.
FUNDAMENTALS
The ringgit, palm's currency of trade, weakened 0.39 per cent against the dollar, making the commodity cheaper for buyers holding foreign currencies.
Oil prices rose almost 1 per cent in early trade on Wednesday, extending the prior day's gains as investors weighed a fresh round of sanctions on Iran, a drop in US crude stocks and a softer tone from Donald Trump on the Federal Reserve.
Higher crude oil prices make palm a more attractive option for biodiesel feedstock.
Dalian's most-active soyoil contract rose 0.46 per cent, while its palm oil contract added 0.77 per cent. Soyoil prices on the Chicago Board of Trade (CBOT) were up 0.33 per cent.
Palm oil tracks the price movements of rival edible oils as it competes for a share of the global vegetable oils market.
Indonesia's crude and refined palm oil exports dipped nearly 2 per cent month-on-month in March as local consumption rose due to Ramadan. However, shipments remained at a four-year high.
Palm oil demand from top global buyers China and India is expected to increase as the vegetable oil is now reasonably priced compared to its rivals, the Malaysian Palm Oil Council said on Tuesday.
Palm oil may retest support at RM3,875 per metric ton, as the downtrend is considered steady, Reuters technical analyst Wang Tao said.
Stock markets were enjoying a much-needed relief rally in Asia on Wednesday after President Donald Trump said he had no plans to fire the head of the Federal Reserve, and hinted at lower tariffs for China.
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