Palm oil dips

Malaysian palm oil futures fell in evening trade to the lowest in almost a month following the release of government data showing better-than-expected output growth in March. The palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 1.1 percent to reach 2,639 ringgit ($681) per tonne at the closing trade. Traded volumes were 43,083 lots of 25 tonnes each, versus a 2015 daily average of 44,600 lots.
Palm oil, which fell for a sixth consecutive session on Tuesday, dropped 2.5 percent last week after reaching a near two-year high of 2,793 ringgit on March 29. Data from the Malaysian Palm Oil Board (MPOB) showed a 16.9 percent jump in output in March from February, more than double the 8 percent growth forecast in a Reuters poll. "Everyone thought the report would be bullish as stocks fell to 1.89 million tonnes but the surprising factor was production growth. Had it not been for exports, inventories would have looked heavy," said a trader based in Kuala Lumpur. The trader added that Malaysia needs to see stronger palm shipments for benchmark prices to rise to 3,000 ringgit, as predicted by leading industry analysts.
"It's possible by June if we don't have aggressive production growth," the trader said.
Output in the world's second largest palm oil producer Malaysia was expected to take a hit from the dry weather effects of the El Nino weather event, which lowers yields due to the scorching heat it brings across Southeast Asia. Analysts say new planted areas and better yields in Peninsular Malaysia made up for the low output. A bearish target at 2,629 ringgit per tonne remains unchanged for palm oil, according to technical analysis by Reuters market analyst for commodities and energy technicals Wang Tao.
In competing vegetable oil markets, the May Chicago Board of Trade soyoil contract fell 0.2 percent, while the September soybean oil contract on the Dalian Commodity Exchange rose 0.03 percent. The offer price for crude palm kernel oil further dropped to 4943.85 ringgit per tonne in the evening, down 50 ringgit from Monday evening, according to price assessments by Thomson Reuters.