KUALA LUMPUR, Jan 18: Malaysian palm oil prices fell on Wednesday, halting a three-day climb after weaker soyaoil prices in the United States weighed on the market.

But even steeper declines were avoided amid speculation that stocks of palm oil will drop in the next two months with a lower production cycle.

A drop in the value of the Malaysian currency also pulled futures off their lows.

Palm oil is exported in dollars, but its futures prices, which determine export prices, are in ringgit. A weaker ringgit makes exports of palm oil cheaper and enhances their competitiveness against rivals such as soyaoil.

The ringgit fell to a low of 3.7590 per dollar on Wednesday, before ending at 3.7545, or 0.15 per cent down from Tuesday’s close of 3.7490 [ID:nSP337891].

Bursa Malaysia Derivatives third-month crude palm oil contract, April, closed down two ringgit at 1,430 ringgit ($380.88) a ton, after trading between 1,427 and 1,432.

The broader futures market was down one to two ringgit. Volume was light at 2,211 lots of 25 tons each, compared with the 6,000 lots commonly seen on a busy day.

Soyaoil futures on the Chicago Board of Trade, which often determine direction for palm oil, fell upon their reopening on Tuesday from a long weekend.

CBOT’s March soyaoil fell 0.45 cent to 21.22 cents a lb at Tuesday’s close. It slid to a low of 21.11 cents in Wednesday’s electronic trade during Asian hours, before pulling back to 21.13.

Palm oil stocks in Malaysia, the world’s largest producer of the commodity, hit a record 1.6 million tons at end-November and were unchanged at end-December.

But inventories could fall 10 to 15 per cent in the next two months as the crop enters a lower yield period, dealers said.

January is also a time for long festive breaks in Malaysia, meaning less work on plantations.

In Wednesday’s physical crude palm oil market, January quotes stood at 1,410/1,415 ringgit a ton in Malaysia’s southern region and at 1412.50/1,417.50 in the central zone.

Trades were reported at 1,410 ringgit in the south and at 1,410-1,412.50 ringgit in the central region.—Reuters