Palm oil falls

Malaysian palm oil futures fell to a two-month low on Tuesday after the ringgit climbed to a nearly four-month high, with prices further weighed by estimates showing production in the second-largest grower jumped last month. The Malaysian ringgit rose as much as 0.9 percent to 3.2425 per dollar late Tuesday, its strongest since December 17, making the ringgit-priced feedstock more expensive for overseas investors and refiners.
"There was a selldown after the ringgit strengthened sharply, and then prices broke the 2,600 ringgit level," said a trader with a foreign commodities brokerage in Malaysia. The benchmark June contract on the Bursa Malaysia Derivatives Exchange fell dropped 1.8 percent to 2,576 ringgit ($795) per tonne by Tuesday's close. Prices earlier touched 2,573 ringgit, the lowest since February 7.
Total traded volume stood at 41,278 lots of 25 tonnes, above the average 35,000 lots. Technicals showed Malaysian palm oil may hover above a support at 2,613 ringgit, as a rebound from the April 3 low of 2,597 ringgit could have extended, said Reuters market analyst Wang Tao. Prices were also weighed by the prospects of a big jump in crude palm oil production last month.
Traders said the Malaysian Palm Oil Association, a group of planters, has forecast that output in Malaysia surged 17.8 percent in March from February's 1.28 million tonnes, topping market estimates of a 9 percent rise. "There was news saying production for March was very much above market estimates. Everybody became a bit worried," said another trader based in Kuala Lumpur. Official data for Malaysia's production, exports and end-stocks in March will be released by industry regulators on Thursday. A Reuters poll last week pegged Malaysia's end-March palm inventories at a more than three-year low of 1.58 million tonnes after dry weather earlier this year hindered growth of palm fruit. In other competing vegetable oil markets, the US soyoil contract for May fell 0.5 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodities Exchange edged down 0.1 percent after reopening from a holiday.