(March 30): Malaysian palm oil futures dipped on Wednesday for their first fall after three straight days of gains, as the market weakened on a stronger ringgit.
Palm oil has gained more than 8% so far this month, reaching a two-year high of RM2,793 on Tuesday evening, tracking competing vegetable oils and rising on concerns that dry weather from the El Nino climate pattern will cut output.
The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 1.1% to RM2,749 (US$698) per tonne, its sharpest fall in nearly a month. Traded volumes were 44,823 lots of 25 tonnes each, near a 2015 daily average of 44,600 lots.
"It's primarily ringgit play today. There's also some correction as the market has been going up continuously," said a trader from Kuala Lumpur.
The ringgit gained 1.4% to reach 3.9380 against the dollar, its strongest level in seven months, rising along with other emerging Asian currencies on the possibility of slower interest rate hikes in the wake of the Federal Reserve's cautious stance on monetary policy tightening.
A stronger ringgit, in which palm oil is traded, makes it more expensive for foreign currency holders.
Palm oil may retrace to a support at RM2,716 per tonne, as it failed to break a resistance at RM2,776 again, technical analysis by Reuters market analyst Wang Tao showed.
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