MARKET DEVELOPMENT
Palm Oil Heads for Second Weekly Decline as Ringgit Strengthens
Palm Oil Heads for Second Weekly Decline as Ringgit Strengthens
21/09/2013 (Bloomberg) - Palm oil fell for a third day and was set for a second weekly decline as a surge in the Malaysian currency cut the appeal of ringgit-denominated futures.
The contract for delivery in December lost as much as 0.6 percent to 2,303 ringgit ($729) a metric ton on the Bursa Malaysia Derivatives, and was at 2,305 ringgit by the end of the morning session. Futures dropped 1.8 percent this week. Palm for physical delivery in October was at 2,340 ringgit yesterday, data compiled by Bloomberg show.
The ringgit was set for its biggest weekly advance since the 1998 Asian financial crisis after U.S. Federal Reserve Chairman Ben S. Bernanke said that more evidence of a recovery in the world’s largest economy is needed before the central bank starts to pare $85 billion a month of bond purchases.
“The ringgit has strengthened a lot against the U.S. dollar,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. “This will make palm oil less competitive against other oils like soybean oil and rapeseed oil which are priced in the U.S. dollar and the euro.”
The improving weather in the U.S. Midwest will also boost prospects for the soybean crop, which is crushed to make a substitute oil, Lim said.
Soybeans for November lost 0.4 percent to $13.3375 a bushel on the Chicago Board of Trade. Soybean oil for December delivery fell 0.5 percent to 42.75 cents a pound. Financial markets in China are closed for a public holiday.
The contract for delivery in December lost as much as 0.6 percent to 2,303 ringgit ($729) a metric ton on the Bursa Malaysia Derivatives, and was at 2,305 ringgit by the end of the morning session. Futures dropped 1.8 percent this week. Palm for physical delivery in October was at 2,340 ringgit yesterday, data compiled by Bloomberg show.
The ringgit was set for its biggest weekly advance since the 1998 Asian financial crisis after U.S. Federal Reserve Chairman Ben S. Bernanke said that more evidence of a recovery in the world’s largest economy is needed before the central bank starts to pare $85 billion a month of bond purchases.
“The ringgit has strengthened a lot against the U.S. dollar,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. “This will make palm oil less competitive against other oils like soybean oil and rapeseed oil which are priced in the U.S. dollar and the euro.”
The improving weather in the U.S. Midwest will also boost prospects for the soybean crop, which is crushed to make a substitute oil, Lim said.
Soybeans for November lost 0.4 percent to $13.3375 a bushel on the Chicago Board of Trade. Soybean oil for December delivery fell 0.5 percent to 42.75 cents a pound. Financial markets in China are closed for a public holiday.