Malaysian palm oil futures fell to the lowest in more than seven months on Tuesday, as worries persisted over weak exports and higher output of the tropical oil. Malaysian palm oil exports for the first half of the month fell as much as 24 percent from the same period a month ago, as buying slowed after the start of Ramazan.
An uptick in June production data from industry regulator the Malaysian Palm Oil Board also signalled the start of a higher yield cycle and raised concerns about inventory levels climbing higher this month. "Weak exports and a rise in production are pointing to higher end-stocks this month, while weakness from US and Dalian soyabean oil also weighed on palm," said a trader with a foreign commodities brokerage in Kuala Lumpur.
At market close, the new benchmark October contract on the Bursa Malaysia Derivatives Exchange had lost 1.6 percent to 2,227 ringgit ($699) per tonne. That was just above the low for the day at 2,222 ringgit, the lowest since December 13. Total traded volume stood at 31,639 lots of 25 tonnes each, slightly lower than the average 35,000 lots. Prices moved in a range between 2,222 to 2,266 ringgit.
Market participants are keeping a close watch on global oilseed supplies after the US Department of Agriculture earlier raised forecasts for the country's soyabean output and stockpiles before the next harvest. A higher supply of soyabean to be crushed into soyabean oil could further depress prices of competing palm oil, which has lost 8.7 percent in value so far this year. In vegetable oil markets, the US soyaoil contract for December was up 0.4 percent in late Asian trade. The most-active January soyabean oil contract on the Dalian Commodities Exchange rose 0.1 percent.
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