KUALA LUMPUR: Malaysian palm oil futures fell on Monday for a second consecutive session, weighed down by a stronger ringgit, while traders remained cautious as palm continues to be priced at a premium against rival oils.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange was down RM21 ringgit, or 0.52 per cent, at RM4,030 (US$982.21) a metric ton during the midday break.
Palm prices are currently too high compared to rival oils and they need to get closer to rivals in order for palm to compete for demand in the market, Paramalingam Supramaniam, a director at Selangor-based brokerage Pelindung Bestari, said.
"Palm prices are getting expensive and many are not rushing to buy, but (investors) would rather wait for better prices since rival oils are also undergoing price corrections," he said.
However, a stronger ringgit coupled with the upcoming closure of the Dalian Commodity Exchange (DCE) for the holidays are pushing prices down.
The DCE will be closed for China's Golden Week holiday from Oct. 1 to 7.
The ringgit, palm's currency of trade, strengthened 0.49 per cent against the U.S. dollar, making the commodity more expensive for buyers holding foreign currencies.
Dalian's most-active soyoil contract fell 0.54 per cent, while its palm oil contract shed 1.19 per cent. Soyoil prices on the Chicago Board of Trade fell 0.4 per cent.
Palm oil tracks prices of rival edible oils, as they compete for a share of the global vegetable oils market.
Palm oil may test support at RM4,017 per metric ton, a break below could open the way towards the RM3,928-3,981 range, Reuters technical analyst Wang Tao said.