Malaysian palm oil price declines for 3rd day on forecasts for higher output

  • Markets
  • Friday, 07 Sep 2018

Malaysian palm oil futures fell to their lowest in nearly three years on Friday evening in a fourth session of losses, tracking declines in related edible oils.

KUALA LUMPUR: Malaysian palm oil futures charted a third consecutive session of losses on Friday evening, tracking weaker edible oils and on expectation that production will rise in the coming weeks, traders said.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was down 0.5 percent at 2,266 ringgit ($546.88) a tonne at the close of trade.

It earlier fell to 2,258 ringgit, its lowest in nearly a week. Palm, however, is up 0.8 percent this week.

Trading volumes stood at 29,852 lots of 25 tonnes each at the end of the trading day.

Malaysian markets will be closed on Monday and Tuesday for national holidays.

"The market is down on production expectations," one Kuala Lumpur-based trader said.

Another futures trader said the market was also weighed down by weakness in palm olein on China's Dalian Commodity Exchange, adding that the long holiday weekend could cap the upside.

Palm oil production is widely expected to rise in the coming months in line with seasonal trends. A Reuters poll has forecast that August output is likely to have risen 9.9 percent to 1.65 million tonnes, contributing to higher inventory levels, which are seen hitting a six-month top at 2.41 million tonnes.

Official data from the Malaysian Palm Oil Board is scheduled for release on Sept. 12.

Palm oil could break support at 2,274 ringgit a tonne and fall towards the next support at 2,245 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

The Chicago September soybean oil contract was down 0.2 percent, while the January soybean oil contract on China's Dalian Commodity Exchange edged up 0.1 percent.

In related oils, the Dalian January palm oil contract was down 0.7 percent.

Palm oil prices are affected by movements of other edible oils that compete in the global vegetable oils market. - Reuters

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