Palm oil fell for a third day after Malaysia, the second-largest producer, estimated its output would reach a record and the country’s currency rose to a four-month high, reducing the appeal of ringgit-denominated futures.
The contract for delivery in January slid as much as 0.7 percent to 2,426 ringgit ($774) a metric ton on the Bursa Malaysia Derivatives, and was at 2,438 ringgit at the midday break in Kuala Lumpur. Palm for physical delivery in November was at 2,450 ringgit, data compiled by Bloomberg show.
Production will probably expand 3.3 percent to 19.4 million tons this year as yields increase, more trees begin production and oil extraction rates improve, Malaysia’s finance ministry said Oct. 25 in its Economic Report for 2013-2014. The ringgit was at the strongest level against the dollar since June, after the government laid out plans to cut the fiscal deficit in the 2014 budget announced Oct. 25.
“When the ringgit is higher, palm becomes expensive for importers like India and China,” said Prathamesh Mallya, an analyst at AnandRathi Commodities Ltd. Weather conditions indicate that the government’s production forecast is achievable and that would be “bearish for prices,” he said by phone from Mumbai. India and China are the world’s largest consumers.
Soybeans for delivery in January fell 0.4 percent to $12.8825 a bushel on the Chicago Board of Trade, while soybean oil for December gained 0.3 percent to 40.85 cents a pound.
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