14/04/2010 (Bloomberg) - Palm oil was little changed, tracking soybean oil prices, on expectations of a record oilseed harvest in South America.

June-delivery futures on the Malaysia Derivatives Exchange were little changed at 2,535 ringgit ($791) a metric ton at the 12:30 p.m. trading break. A stronger Malaysian ringgit also reduced demand for the contract which is priced in the currency.

“The inability of soybean oil to move higher is capping palm oil,” said Scott Briggs, the agricultural commodities strategist at Australia & New Zealand Banking Group Ltd.

Soybean oil for July delivery was little changed at 40.18 cents a pound. Soybean oil costs $96.24 a ton more than palm oil, according to Bloomberg data. That compares to a premium averaging $158 over the last five years.

“Ringgit strength is bad because it further narrows the discount between palm oil and soy oil,” said Arhnue Tan, a senior analyst at ECM Libra Capital Sdn.

The ringgit has surged 7 percent to the dollar this year, and last traded at 31.99 U.S. cents.

“The stronger ringgit is definitely bad for Malaysian refiners,” said Ryan Long, a futures trader at OSK Investment Bank Sdn. in Kuala Lumpur. “Demand for domestically traded crude palm oil is affected as refiners are unable to pay a good price based on the margin.”

The U.S., Brazil and Argentina are poised to report record soybean crops this year, boosting world production to 257.5 million tons, from 211.8 million tons last year, according to the U.S. Department of Agriculture’s Foreign Agriculture Service.

July-delivery soybeans in Chicago were little changed at $9.765 a bushel at 1:34 p.m. Singapore time.

In China, the largest edible oils user, September-delivery palm oil gained 0.5 percent to 7,014 yuan ($1,027) a ton on the Dalian Commodity Exchange at 2 p.m. local time. Dalian soybean oil gained 0.4 percent to 7,736 yuan a ton.