Palm ends lower on weaker crude prices, higher-than-expected output

KUALA LUMPUR: Malaysian palm oil futures fell on Tuesday, dragged by estimates of a jump in June production and tracking weaker crude oil prices.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange settled down 32 ringgit, or 1.34%, at 2,359 ringgit a tonne.

Oil prices fell amid concerns a surge in new coronavirus cases, especially in the United States, will hamper any recovery in fuel demand.

Lower crude oil makes palm a less attractive option for biodiesel feedstock.

The Malaysia Palm Oil Association estimated crude palm oil production in June rose 12.7% from the previous month, a Kuala Lumpur-based trader said.

The estimate was higher than a Reuters poll pegging production to increase by 8%.

India's palm oil imports in June fell 18% from a year earlier to 562,932 tonnes as imports of refined palmolein declined after New Delhi restricted overseas purchases of the grade earlier this year.

Palm oil demand in India, the world's top edible oil importer, is set to plunge this year as coronavirus lockdowns slash food service sector demand and households opt for alternatives at the supermarket.

Meanwhile, soybean futures on the Chicago Board of Trade hit a near four-month high on Monday on worries about hot, dry weather hitting US crop-growing areas over the next two weeks, traders said. The soybean oil contract, however, was last down 1.13%.

Elsewhere, Dalian's most-active soyoil contract fell 1.24%, while its palm oil contract eased 0.95%.

Palm oil is affected by price movements of related oils as they compete for a share in the global vegetable oils market.