Malaysian palm oil price hits 2-year low on weaker Dalian oils, stronger ringgit

Malaysian palm oil futures extended a downward trend, closing 0.3 percent lower on Monday as weak demand weighed on prices.

KUALA LUMPUR: Malaysian palm oil futures fell more than 1 percent to a two-year low on Tuesday, hurt by weaker oils on China's Dalian Commodity Exchange and a firmer ringgit.

The ringgit rose to its strongest levels against the dollar in two weeks on Tuesday, and was up 0.1 percent at 4.0200 per dollar at 1040 GMT. A stronger ringgit, palm's traded currency, makes the edible oil more expensive for foreign buyers.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.4 percent at 2,259 ringgit ($561.94) a tonne at the close of trade.

It earlier fell as much as 1.5 percent to 2,234 ringgit, its lowest since July 15, 2016.

Trading volumes stood at 63,851 lots of 25 tonnes each on Tuesday evening.

"The ringgit strengthening, a weak Dalian and poor exports are all factors for palm's decline today, though it is mainly on Dalian's weakness," said a Kuala Lumpur based trader.

"As better production is expected, slow exports due to low pricing are causing importers to buy on 'need only basis', there is no rush to buy."

June production fell 12.6 percent to 1.33 million tonnes versus the previous month, according to data from industry regulator the Malaysian Palm Oil Board (MPOB) on Tuesday. Output is expected to rise in July and throughout the third quarter of the year, in line with seasonal trends.

The MPOB data also showed end-stocks in June rose 0.8 percent from the previous month to 2.19 million tonnes, while exports declined 12.6 percent to 1.13 million tonnes.

Malaysian palm oil shipments during July 1-10 also fell 14.4 percent from the corresponding period last month, reported inspection company AmSpec Agri Malaysia on Tuesday.

Cargo surveyor Societe Generale de Surveillance reported a 23.1 percent decline in exports for the same period.

In other related oils, the September soybean oil contract on China's Dalian Commodity Exchange fell 0.03 percent, while Chicago December soybean oil declined 1.7 percent.

The Dalian September palm oil contract was also down 2.4 percent.

Palm oil prices track the performance of other edible oils as they compete for a share in the global vegetable oils market.

Palm oil may fall into a range of 2,238-2,253 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

($1 = 4.0200 ringgit)

($1 = 68.8000 Indian rupees)

($1 = 6.6280 Chinese yuan) - Reuters