VEGOILS-Palm Falls on Firmer Ringgit; Eyes on Data

(Reuters) –  Malaysian palm oil futures fell in morning trade on Thursday, as a further strengthening of the ringgit dampened trading sentiment.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange dropped 0.6 percent to 2,727 ringgit ($646.98) at the midday break.

Traded volumes were thin, at 16,135 lots of 25 tonnes each at noon.

“The market is down mainly because of the ringgit,” said a Kuala Lumpur-based futures trader, adding that traders are keeping to the sidelines ahead of industry data.

The ringgit has been strengthening for the past three days, rising 0.54 percent on Thursday, its biggest gain since April 25.

A more expensive ringgit makes palm oil less attractive to buyers of the tropical oil holding foreign currencies.

Another trader, based in Singapore said external factors are looking weak to neutral, with a stronger ringgit and drop in soyoil prices impacting palm.

“Seasonally, palm is quite expensive. It has never been this price for an estimated 2 million tonne stock,” the trader said.

A Reuters poll among planters, analysts and traders showed that Malaysian palm oil August stocks are expected to rise towards the 2-million tonne mark, as output remains near its strongest in two years.

The Malaysian Palm Oil Board is due to release production and export data on Sept. 11.

On technicals, palm oil may retest a resistance at 2,769

ringgit per tonne, a break above which could lead to a gain to the next resistance at 2,790 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.

The soybean oil contract on the Chicago Board of Trade was unchanged.

In other related oils, the January soybean oil on the Dalian Commodity Exchange was down 0.5 percent, while the January palm olein contract also fell 0.9 percent.

Palm oil prices are affected by the movements in related edible oils, as they compete for a share in the global vegetable oils market.