Palm Oil Nears Three-Year Low as Ringgit Climbs Most Since 1998
Category: Oilseeds
(Businessweek) – Palm oil tumbled to near a three-year low as the ringgit climbed the most since 1998 after Malaysian Prime Minister Najib Razak won re-election, lowering the appeal of commodities priced in the nation’s currency.
The contract for July delivery fell as much as 1 percent to 2,230 ringgit ($752) a metric ton on the Bursa Malaysia Derivatives, the lowest price for the most-active contract since Dec. 13, and ended the morning session at 2,238 ringgit. Futures, which lost 2.8 percent last week, reached 2,217 ringgit on Dec. 13, the lowest since November 2009.
The ringgit rallied and stocks rose to a record after Najib won a clear majority in the election, giving him a mandate to continue his economic reforms. The currency gained 2.4 percent to 2.9637 per dollar as of 11:12 a.m. in Kuala Lumpur and reached 2.9625, the strongest level since Sept. 2, 2011, data compiled by Bloomberg show.
“A stronger ringgit weakened the crude palm oil prices as when a local currency strengthens, it is detrimental to the export sector,” said Han Qiang Sim, an analyst with Phillip Futures Pte. in Singapore. “Supply for crude palm oil has been high and inventories are still above the 2-million-ton level.”
Reserves in Malaysia decreased 5.1 percent to 2.06 million tons, the least since July, from 2.17 million tons in March, a Bloomberg survey showed. While exports fell 6.5 percent to 1.44 million tons, they were higher than the output that gained 5.3 percent to 1.4 million tons, according to the survey. Official data are due for release on May 10.
Soybeans for July delivery was little changed at $13.875 a bushel on the Chicago Board of Trade. Soybean oil fell 0.2 percent to 49.17 cents a pound.
Refined palm oil for September delivery rose 0.3 percent to 5,904 yuan ($959) a ton on the Dalian Commodity Exchange. Soybean oil for same month delivery advanced 0.3 percent to 7,292 yuan a ton.
