Palm oil falls on higher output estimates ahead of official data

KUALA LUMPUR: Malaysian palm oil futures fell on Wednesday, weighed by expectations of a rise in August supply ahead of official data and poor import margins in key destination markets.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange slipped 5 ringgit, or 0.11%, to 4,385 ringgit ($1,055.10) a tonne, after rising for four straight days.

The contract closed at a near two-week high in the previous session.

Palm oil hits 10-day closing high

"Import margins for crude and refined palm oil are seen as negative in India, Europe and China for September to December," said Marcello Cultrera, institutional sales manager and broker at Phillip Futures in Kuala Lumpur.

"There are also expectations for 15%-20% higher inventories for August with sustained production peaking in September and October."

The Malaysian Palm Oil Association on Tuesday estimated August production to have risen 12.3% from the month before to 1.71 million tonnes, according to traders.

The Malaysian Palm Oil Board (MPOB) is expected to release data on August production on Friday.

Refinitiv Commodities Research has cut its estimate for Malaysia's palm oil production in the 2020/21 marketing year by 2% from its previous estimate, despite the output rebound in August, on pandemic-led labour shortages, operational disruptions and the return of wet weather conditions.

Refinitiv, however, raised its forecast for top producer Indonesia to 48.4 million tonnes due to seasonally stronger yield.

Dalian's most-active soyoil contract fell 0.04%, while its palm oil contract rose 0.6%. Soyoil prices on the Chicago Board of Trade were up 0.7%.

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