In The News - 25/07/2005

Malaysian palm oil fell as much as 2.1 percent on Friday as producers tried to shield the commodity, sold abroad in dollars but traded at home in ringgit, from losing competitiveness after a change in currency policy.

Malaysia on Thursday dropped its seven-year peg of 3.8 to the dollar and moved to a managed float after China revalued the yuan and changed its currency policy.

Economists had estimated that the ringgit was about 10 percent undervalued, which left the palm oil industry bracing for a similar depreciation in prices to stay competitive with other oils.

On Friday the ringgit was hardly changed in value, hovering between 3.78 and 3.79 to the dollar <MYR=>.

Palm oil contracts on Bursa Malaysia Derivatives fell sharply as local plantation groups sold. 

"It's pre-emptive hedging that they are doing," said a futures trader in Kuala Lumpur. "Whether it's necessary, we'll only know as the ringgit moves."

At Friday's close, Bursa Malaysia's benchmark third-month palm oil contract, October <KPOV5>, was down 26 ringgit, or 1.8 percent, to 1,382 ringgit ($366.40) a tonne.

It fell 30 ringgit, or 2.1 percent, earlier to an intra-day low of 1,378, breaking the key support level of 1,380.

Other traded months were down 18 to 29 ringgit <0#KPO:>.

Volume was 10,085 lots of 25 tonnes each, one of the heaviest in months. The market usually sees 6,000 lots or so on an active day.

Dealers said uncertainty in U.S. soyoil prices on Friday also weighed on palm oil.

August soyoil on the Chicago Board of Trade (CBOT) initially fell 0.11 cent in Friday's electronic trade, although it ended up 0.14 cent at 24.45 cents per lb <ZLQ5>.

Chicago Board of Trade soybean futures turned lower at midday on Friday, reversing from early strength on technical selling by commodity funds, traders said.

Citigroup and Refco Inc. were prominent sellers, traders said. As of 11:58 a.m. CDT (1658 GMT), new-crop November soybeans <SX5> were down 2-1/2 cents at $6.77 per bushel, down from a morning high of $6.88.

Back

For More Inquiries:
Our e-mail : [email protected]