Malaysian palm oil futures fell for the third straight session on Friday as a stronger local currency curbed appetite from overseas buyers, but strong export numbers limited losses.
Despite easing slightly, the ringgit was still near 3-month highs hit as it surged nearly three per cent after the US
Federal Reserve’s surprise decision not to taper its economic stimulus just yet.
But healthy exports in September reined in losses and kept prices in a tight range between RM2,303-RM2,318 per tonne.
Cargo surveyor Intertek Testing Services showed that shipments of Malaysian palm oil rose 13.1 per cent to 996,377 tonnes in September 1-20 compared to a month ago.
"The strong ringgit is definitely weighing on the market, both yesterday and today," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But the fact that prices went down so little shows the resilience and friendliness that the market feels towards palm oil. And RM2,300 is still a strong support level," the trader added.
By the mid-day break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 0.5 per cent to RM2,305 per tonne, setting prices on track for a weekly loss of 1.8 per cent.
Total traded volumes stood at 5,567 lots of 25 tonnes each, much lower than the average 12,500 lots.
On the technical front, a bearish target at RM2,270 per tonne remains unchanged for Malaysian palm oil as it has a better chance to break support at RM2,311, said Reuters market analyst Wang Tao.
Investors have turned bearish on forecasts that Southeast Asian palm oil output could start rising from September onwards, with the seasonally higher cycle seen dragging on until at least April 2014.
Expectations of bumper crops of competing oilseeds such as soybeans could cause a flood of edible oils in the market and depress prices in the coming months. Palm prices have already lost 5.5 per cent so far this year - extending declines into a third year.
But palm oil exports seem to be holding for now, lending hope that the strong demand will eat into stocks and prevent inventories from surging to record levels last seen in December.
Stocks at end-August stood at 1.67 million tonnes.
Another cargo surveyor, Societe Generale de Surveillance will release data for the same period later on Friday.
In other markets, Brent crude prices edged down towards US$108 a barrel on Friday, set for a second week of losses.
The US soyoil contract for December eased 0.5 per cent in early Asian trade.
The Dalian Commodities Exchange will resume trading on Monday after closing from September 19 for the mid-autumn festival.-- Reuters