KUALA LUMPUR Malaysian palm oil futures reversed early gains to fall for a third straight session on Monday, as expectations of higher production in September outweighed strong demand.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 82 ringgit, or 2.17%, to 3,701 ringgit ($813.76) a tonne, after jumping more than 2% earlier in the session.
Overhanging high stocks and negative margins in some destinations are keeping buyers away, a Kuala Lumpur-based trader said.
Production in the world’s second-largest producer during Sept. 1-15 is pegged to rise 7.5%, traders said, citing data from the Southern Peninsula Palm Oil Millers’ Association (SPPOMA).
Meanwhile, exports of Malaysian palm oil products for Sept. 1-15 rose between 19% and 25% from the same period in August, cargo surveyors said last week.
India, the world’s biggest edible oil buyer, has slashed the base import prices of crude and refined palm oil, as well as crude soya oil, as prices corrected in the world market.
Farmers across Asia are busy planting trees to boost palm oil production but nurseries are struggling to keep up with demand for sprouts and seedlings, risking a delay in the industry’s recovery from the pandemic.
In related oils, Dalian’s most-active soyoil contract fell 0.8%, while its palm oil contract lost 1.2%. Soyoil prices on the Chicago Board of Trade were down 1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
The ringgit, palm’s currency of trade, hit its lowest since January 1998, making the commodity cheaper for holders of foreign currency.
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