Malaysian palm oil futures dropped on Thursday due to market corrections and a strengthening ringgit. The benchmark December palm oil contract on the Bursa Malaysia Derivatives Exchange closed 2.9 percent lower on Thursday at 2,128 ringgit ($500.71) a tonne, after seeing consecutive rises in the last two weeks. Traded volume stood at 66,318 lots of 25 tonnes each, well above the average 35,000 lots usually traded in a day.
The ringgit gaining against the dollar is the main factor for the downtrend, said a trader based in Kuala Lumpur, but traders are also taking profit after the market went up in the last ten days. “It was a bit of an expected correction as the market run up was too fast,” he said. “Prices should find support again at 2,100 ringgit.”
The ringgit strengthened against the dollar on Thursday by 0.7 percent, reaching 4.2500 per dollar on Thursday. It is emerging Asia’s worst performing currency, having lost about 18 percent so far this year. A weaker ringgit usually lends some support to palm prices. Palm oil may drop to 2,068 ringgit per tonne as it has broken a support at 2,132 ringgit, said Reuters market analyst Wang Tao. In other vegetable oil markets, the most active January soybean oil contract on the Dalian Commodity Exchange was down 0.15 percent, while the US December soyoil contract lost 0.9 percent.