Malaysian palm oil price hits over 6-week low on firm output, weaker demand

palm oil fruits

KUALA LUMPUR: Malaysian palm oil futures fell to an over six-week trough on Tuesday evening, recording a fifth straight session of losses on cues from prospects of firm output, slowing demand and weaker related edible oils.

The benchmark palm oil contract for the December delivery on the Bursa Malaysia Derivatives Exchange was down 2.3% at 2,141 ringgit ($512.20) per tonne at the close of trade, its sharpest intraday decline in three weeks.

The commodity fell as much as 2.5% earlier in the session to 2,134 ringgit, its weakest level since Aug. 8.

"Malaysian production numbers are looking good, we are hearing in Indonesia that is the case too," said a Kuala Lumpur based futures trader, referring to palm oil output in September.

Weaker related edible oils had also weighed on palm's prices earlier in the day, said traders.

Malaysian palm oil shipments during Sept. 1-20 fell between 3.9% and 10.8% from a month earlier, according to data from three cargo surveyors last week.

Output in Malaysia, the world's second largest producer, rose 4.6% in August from a month earlier to 1.82 million tonnes, its highest levels since November, according to data from the Malaysian Palm Oil Board earlier this month.

In other related oils, U.S. soyoil futures on the U.S. Chicago Board of Trade were down 0.6%.

Chicago soybean futures edged down on Tuesday, giving up some of the previous session's gains, although worries about wet weather ahead of U.S. harvest curbed losses.

The January soyoil contract on the Dalian exchange fell 1.2% and the Dalian January palm oil contract declined 1.9%.

Palm oil prices are affected by movements in related oils, as they compete for a share in the global vegetable oils market. - Reuters