Malaysian palm oil price slides to 8-month low as ringgit continues to climb

KUALA LUMPUR: Malaysian palm oil futures slid to an eight-month low on Tuesday as the ringgit  continued to gain traction, stoking worries that overseas buyers may shy away from palm at a time when the tropical plant enters a higher production cycle. 
    The Malaysian currency rose as high as 3.5440 against the
U.S. dollar, its strongest since Feb. 9, in its third straight
session of gains, making the ringgit-priced palm feedstock more
expensive for foreign customers.
    "Palm is under pressure because of the strong ringgit, and
talk of higher production estimates," said a trader with a
foreign commodities brokerage in Malaysia.
    In its fifth session of losses, the benchmark July contract
 on the Bursa Malaysia Derivatives exchange touched
2,075 ringgit a tonne in early trade, its lowest since Sept. 22,
before settling at 2,092 ringgit ($589) by Tuesday's close, down
0.8 percent. 
    Total traded volume stood at 67,540 lots of 25 tonnes each,
well above the usual 35,000 lots.       
    Technical charts showed that palm oil is expected to test a
support at 2,076 ringgit per tonne, a break below which will
open the way towards a range of 2,039-2,060 ringgit, Reuters
market analyst Wang Tao said. 
 
       
    Palm's steep drop was not mirrored by soyoil, a common food
and fuel substitute, enabling the tropical oil widen its
discount to the rival oil. But the discount has to be attractive
enough to be able to pull back demand from price-sensitive
buyers, traders said.
    "It (the discount) has to be at a level where it can attract
demand. At the moment, it is not enough," the Malaysia-based
trader added. 
    Palm olein is currently around $70 cheaper
than Argentine soyoil , from an under $25 discount
early April, but narrower than $160 at the start of 2015. 
    The U.S. July soyoil contract was down 0.1 percent in
late Asian trade, while the most active September soybean oil
contract on the Dalian Commodity Exchange gained 0.1
percent.
    Elsewhere, Australian Bureau of Meteorology said Pacific
Ocean sea temperatures now exceed El Nino thresholds, while
trade winds have weakened over the last few weeks. Should this
pattern continue, the bureau said, an El Nino will develop.
 
    In other markets, oil prices fell on Tuesday ahead of weekly
U.S. crude inventory data that is expected to hit another high,
withdrawing further from a rally that saw Brent crude futures
touch a 4-1/2 month high. 
  Palm, soy and crude oil prices at 1011 GMT
                                                                                                                                      
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAY5    2101   -20.00    2089    2120     284
  MY PALM OIL      JUN5    2098   -19.00    2082    2120    7155
  MY PALM OIL      JUL5    2092   -16.00    2075    2115   37100
  CHINA PALM OLEIN SEP5    4868   -18.00    4858    4932  901886
  CHINA SOYOIL     SEP5    5678    +8.00    5660    5746  942670
  CBOT SOY OIL     JUL5   31.82    -3.90   31.75   31.88    8391
  INDIA PALM OIL   APR5  435.90    -3.90  435.30  438.60     278
  INDIA SOYOIL     JUN5  587.60    -5.80  587.00  594.00   33470
  NYMEX CRUDE      JUN5   56.83    -0.16   56.07   56.91   28388
                                                                                                                                      
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel
 
 ($1 = 3.5540 Malaysian ringgit)    
 ($1 = 6.2057 Chinese yuan)
 ($1 = 63.16 Indian rupees)
- Reuters