SINGAPORE, May 7: Malaysian palm oil futures edged lower on Tuesday in a thinly traded market, as a firm ringgit and key industry data due at the end of the week kept most investors on the sidelines.
A strong Malaysian ringgit, following the poll victory of the country’s ruling coalition, continued to weigh on palm oil prices, which fell to a near 5-month low on Monday, as the ringgit-priced feedstock became more expensive for overseas buyers and refiners.
Investors also avoided taking risky bets ahead of official data for Malaysia’s April palm oil stocks and output due on Friday that could provide further trading cues.
‘We can see signs that prices are already bottoming. The next few days will be crucial in determining market direction,’ said a dealer with a foreign commodities brokerage in Kuala Lumpur.
By the midday break, the benchmark July contract on the Bursa Malaysia Derivatives Exchange had edged down 0.3 percent to 2,243 ringgit ($753) per tonne, after trading in a tight range between 2,239 and 2,255 ringgit. Prices fell as low as 2,230 ringgit on Monday, a level last seen on Dec. 13.
Total traded volumes were thin, at 6,259 lots of 25 tonnes each, compared to the usual 12,500 lots.
Technicals showed a bearish target at 2,160 ringgit per tonne has been adjusted to 2,190 ringgit for palm oil, based on the speed of its fall and a small falling channel, said Reuters market analyst Wang Tao.
Traders are pinning hopes on stagnant production to help ease stock levels, which fell to 2.17 million tonnes by the end of March.
Prices could gain further support if inventory levels fall below the key psychological threshold of 2 million tonnes, although most traders expect only a marginal drop, due to weak exports. Malaysia’s palm oil shipments in April fell as much as 5.6 percent from a month ago, cargo surveyor data showed.
In other markets, Brent futures slipped back towards $105 a barrel on Tuesday as investors saw the recent surge in prices as an opportunity to sell and book profits, with concerns of an escalation in tension in the Middle East helping to stem losses.
In vegetable oil markets, the U.S. Soyoil for July delivery gained 0.6 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange rose 1.3 percent.
(AGENCIES)
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