Palm hits eight-month low

Malaysian palm oil futures hit an 8-month low on Wednesday, in line for a sixth consecutive session of declines, as it tracked weaker soyoil on the Chicago Board of Trade and other related edible oils. Expectations of rising production are also weighing on the market, traders said. The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange lost 0.4 percent, reaching 2,464 ringgit ($559.49) a tonne at the midday break. It earlier hit an intraday low of 2,452 ringgit, its weakest since August 11.
Traded volumes stood at 21,764 lots of 25 tonnes each at noon. "Palm is down in line with weaker CBOT soybean oil futures... which closed lower overnight. Further declines in Dalian olein in morning trade may keep buyers at bay," said a futures trader from Kuala Lumpur, referring to palm olein on China's Dalian Commodity Exchange. Palm oil prices are impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.
Soybean oil on the CBOT lost 2.4 percent in the previous session, and was last down 0.2 percent. In other related vegetable oils, the September soybean oil contract on the Dalian Commodity Exchange fell 2.4 percent, while the September contract for palm olein declined 1.5 percent. Palm oil prices have been on a steady decline in recent weeks - giving up nearly 7 percent so far this month - as traders sold on concerns of rising output, despite strengthening export demand in April reflected on cargo surveyor data.
Production in Malaysia and Indonesia, which produce about 85 percent of the world's palm oil, is expected to recover as the lingering effects of a crop-damaging El Nino wear off. Malaysian production rose for the full month of March, up 16.3 percent from February, marking its first monthly gain since September and in line with seasonal trends. Traders expect output growth to pick up further in April and in the coming months. Palm oil may break a support at 2,464 ringgit and fall more to the next support at 2,437 ringgit, said a Reuters market analyst for commodities and energy technicals.