KUALA LUMPUR: Malaysian palm oil futures edged down on Monday, slipping off a two-week high as losses in overnight soy markets as well as weak crude prices weighed, although optimism that wet weather could cap output in the world's top palm growers provided support.
Export demand for Malaysian palm oil held steady, but was still down 11.2 percent for Oct. 1-25 period compared with a month ago, according to data from cargo surveyor Intertek Testing Services. The fall was less steep from early October.
"The weakness in US soybean oil on Friday night, as well as today's Dalian pushed the palm market lower," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But overall, the supportive tone is still prevailing in the market. Now, people are waiting for a clearer picture on October production," the trader added. "Prices are range-trading between 2,150-2,240 ringgit."
By the midday break, the benchmark January contract on the Bursa Malaysia Derivatives Exchange was down 0.5 percent to 2,170 ringgit ($663) per tonne. Palm posted last week its biggest weekly gain in four with a rise of 1.8 percent.
Total traded volume stood at 11,574 lots of 25 tonnes, below the usual 12,500 lots.
Benchmark prices were trapped in a tight range of 2,164 ringgit to 2,176 ringgit as investors waited for more direction and avoided risky bets ahead of a two-day palm oil conference in Kuala Lumpur from Tuesday.
Technicals, however, showed palm may drop into a range of 2,132-2,149 ringgit per tonne, as a correction from the Oct. 1 high of 2,223 ringgit could have extended, said Reuters market analyst Wang Tao.
The rainy monsoon season, which affects top oil palm producers Indonesia and Malaysia and is marked by frequent thunderstorms, is expected to begin in early or mid-November and stretch out into late December.
The heavy rains typically cause flooding which can delay harvesting and transportation of palm fruit. Market players are looking to the expected fall in output to eat into Malaysian stockpiles of the tropical oil that stood at 2.09 million tonnes as of September end.
In competing vegetable oil markets tracked by palm, the US soyoil contract for December fell 0.4 percent in early Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange shed 1.6 percent.
In other markets, Brent crude futures fell below $86 a barrel on Monday after Goldman Sachs cut its price forecasts for the contract and for US oil in the first quarter of next year by $15.
Palm oil typically competes with the energy market for its increasing use as a renewable fuel.
Another cargo surveyor Societe Generale de Surveillance will release export data for the same period later on Monday.
Palm, soy and crude oil prices at 0633 GMT.
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