Palm oil snaps five-day gain ahead of key data

KUALA LUMPUR: Malaysian palm oil futures fell more than 1% on Thursday, snapping a five-day rally, as investors braced for a rise in August stockpiles and turned cautious ahead of the release of supply and demand data.

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange slid 76 ringgit, or 1.7%, to 4,402 ringgit ($1,061.49) a tonne by the midday break.

It had earlier fallen to an intraday low of 2.5%.

Speculative selling took over after the US Department of Agriculture (USDA) released its monthly US crop acreage data two days earlier than scheduled, said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

"The selling in futures provided an excellent opportunity for buyers to cover their exposure," Paramalingam said, adding that prices are expected to recover quickly.

The market is now awaiting Malaysian Palm Oil Board data and cargo surveyors' data on Sept. 1-10 exports, both due on Friday.

Traders are anticipating a strong double-digit rise in August supply, in line with industry surveys.

A Reuters poll last week pegged inventories at the end of August to expand to its highest in over a year as production rebounded amid a steep fall in exports.

Indonesia palm oil exports in January-July jumped 3% compared to the same time last year, official data from the trade ministry.

Dalian's most-active soyoil contract fell 0.9%, while its palm oil contract fell 0.1%. Soyoil prices on the Chicago Board of Trade were down 0.5%.

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

Palm oil may break a resistance at 4,493 ringgit per tonne and rise into a range of 4,587-4,698 ringgit, Reuters technical analyst Wang Tao said.