KUALA LUMPUR: Malaysian palm oil futures lost early gains, sliding to an eight-month low in late trade on Monday, weighed down by expectations of rising output in top producers Malaysia and Indonesia.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was down 0.2 percent at 2,498 ringgit ($567.34) a tonne at the close, having hit 2,486 ringgit for its weakest since Aug. 12.Palm had been in positive territory, tracking rival oils. It had dropped 4 percent last week, the sharpest weekly decline since Feb. 17.
Traded volumes reached 53,849 lots of 25 tonnes each.
"The market is heading lower on the back of expectations that production is going higher," one Kuala Lumpur-based futures trader said, referring to output in the world's second-largest producer Malaysia.
The trader added that the market also forecast rising output data from the Indonesian Palm Oil Association (GAPKI).
Palm oil output in Southeast Asia is expected to rebound this year, notably from the second half of the year as fresh fruit bunch yields recover from the crop-damaging effects of a dry El Nino weather pattern.
Malaysian production jumped 16.3 percent month on month in March for its first monthly gain since September, in line with seasonal trends
Palm oil is expected to test support at 2,538 ringgit, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
Palm oil prices are also affected by movements in rival edible oils that compete for a share in the global vegetable oils market.
Soybean oil on the Chicago Board of Trade was up 0.4 percent, while the September soybean oil contract on the Dalian Commodity Exchange rose 0.1 percent.
In related vegetable oils, the September contract for palm olein was up 0.4 percent.- Reuters
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