Malaysian palm oil futures fell for a second consecutive session to a one-week low on Tuesday, under pressure from a stronger ringgit which triggered technical selling.
The ringgit strengthened against the dollar on Tuesday, rising 1% to 4.0550 in the evening. It was at its highest level since May 18 and matched those seen on May 19 at 4.0540, making palm oil more expensive for holders of foreign currencies.
That followed a 1.2% jump in the ringgit on Monday evening after bearish US jobs data lowered market expectations of a June interest rate hike.
The palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange dropped 2.3% to RM2,599 (US$641) per tonne in the evening.
It declined to an intraday low of RM2,597, its weakest levels since June 1. Traded volume stood at 70,723 lots of 25 tonnes each on Tuesday evening, higher than the 2015 average of 44,600.
"The market fell on the ringgit mainly, and when it falls below the previous day's low it triggers some technical selling," said a trader from Kuala Lumpur.
However, Palm oil has gained 1.5% since the start of the month, helped by stronger exports leading up to the start of Ramadan and in anticipation of the subsequent Eid al-Fitr celebrations which will mark the end of the fasting month. Supply growth for May is also seen slowing from a month ago, as palm yields take a hit from last year's crop damaging El Nino.
A Reuters poll has forecast an 8.8% fall in stockpiles to 1.64 million tonnes. Official data from the Malaysian Palm Oil Board (MPOB) is scheduled for release on June 10.
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