Malaysian palm oil futures fell to their lowest in a week on Wednesday, weighed down by expectations of rising production and tracking weaker performances in related edible oils. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange dropped 0.5 percent to 2,642 ringgit ($616.71) at the close of trade, its second consecutive day of losses. Earlier in the session, it touched 2,617 ringgit, its weakest since July 26.
Traded volumes stood at 52,062 lots of 25 tonnes each on Wednesday evening. "The palm market is down tracking weaker soyaoil and RBD (refined bleached deodorized) palm olein," said a futures trader in Kuala Lumpur, referring to soyaoil on both the Chicago Board of Trade and China's Dalian Commodity Exchange, and Dalian palm olein.
Traders say forecasts of rising output contributed to market concerns, ahead of the official July data to be released next week by the Malaysian Palm Oil Board. "I don't think production will go up a lot," said a futures trader, as palm trees are still facing the lingering effects of the 2015 crop-damaging El Nino.
Output in Malaysia, the second-largest producer of the tropical oil, is seen rebounding in July in line with the seasonal trend and on a post-El Nino recovery. In other related oils, the October soyabean oil contract on the Chicago Board of Trade climbed to 0.7 percent. In the previous session, it saw a 2.4 percent decline after the US Department of Agriculture rated 59 percent of the US soya crop in good-to-excellent condition.
The September soyabean oil on the Dalian Commodity Exchange was up as much as 1.1 percent, while the September palm olein contract fell up to 1.2 percent. Palm oil prices are impacted by related edible oils, as they compete for a share in the global vegetable oils market. Palm oil may retrace more to 2,623 ringgit per tonne, as it failed to break a strong resistance at 2,703 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.
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