KUALA LUMPUR: Malaysian palm oil futures reversed gains from the more than two-year high reached the previous day, as the market reacted to revised industry data and a strengthening ringgit on Tuesday. Benchmark palm oil futures for January on the Bursa Malaysia Derivatives Exchange dropped 2.2 percent to 2,760 ringgit ($664.26) a tonne at the market close. Traded volumes stood at 51,328 lots of 25 tonnes each. A trader based in Kuala Lumpur noted that the market had been driven by the data received over the two days, as well as the strengthening ringgit.
“The amendment to the Malaysia Palm Oil Association output data, from a 11 percent decline announced yesterday to 3.9 percent increase amended today, has significantly impacted the market. People took the numbers seriously,” he said. The trader added there could be a further market correction over the next few days, as futures traders who thought prices could trend up to the 2,900 ringgit level, sell off in light of the new data.
The ringgit, palm’s traded currency, moved 0.48 percent higher against the dollar to 4.1550, making the tropical oil less attractive to holders of foreign currencies. Lower export data released also dented the palm contract, as traders expected October to be typically a month of good demand. Exports of Malaysian palm oil products for October 1-25 fell 10.9 percent to 990,939 tonnes from 1,112,058 tonnes shipped during September 1-25, cargo surveyor Intertek Testing Services said on Tuesday.
Another trader said that while traders had responded to the revised output data, prices were also tracking a slide in Chicago Board of Trade futures. The December soyabean oil contract on the Chicago Board of Trade rose 2.2 percent on Monday, but fell as much as 1.4 percent on Tuesday. September palm oil production in Malaysia rose 0.8 percent from the previous month, its smallest monthly gain since June 2011. This was the lowest output figure for September since 2010.
