Malaysian palm oil futures declined on Monday, marking a second session of losses in three on concerns that production could rise in the coming weeks. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 1.1 percent to 2,169 ringgit ($534.10) a tonne.
Trading volume stood at 61,707 lots of 25 tonnes each. "The market is still concerned about how much improvement there will be in upcoming production," said a Kuala Lumpur-based trader. Palm oil output typically starts to pick up in the second half of the year, but industry players are divided on when production will peak.
Output in Malaysia is expected to enter the high production cycle in the last quarter of the year, but annual production could fall short of forecasts and peak later in the season than usual. Another Kuala Lumpur-based trader said appreciation in the ringgit also contributed to palm's declines on Monday, as this makes the edible oil more expensive for foreign buyers.
The ringgit, palm's currency of trade, gained 0.02 percent against the dollar. In other related oils, the Chicago December soybean oil contract was flat, while the September soybean oil contract on China's Dalian Commodity Exchange was down 0.1 percent.
The Dalian September palm oil contract lost 0.3 percent. Palm oil prices are usually affected by the performance of other edible oils as they compete for a share in the global vegetable oils market.
Palm oil is biased to retest resistance at 2,218 ringgit per tonne, a break above which could lead to a gain to the next resistance at 2,249 ringgit, Reuters market analyst for commodities and energy technicals Wang Tao said.
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