Malaysia palm oil futures fell 1.6 percent on Thursday as traders keep their focus on higher March production of the tropical although some market players point to improving demand this month. A Reuters survey showed plantations are looking at Malaysian palm oil stocks hitting a 3-month high in March and double-digit production growth as yields recover after two years of lacklustre growth.
Industry regulator Malaysian Palm Oil Board (MPOB) will issue the March data on Monday, April 11, while cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will release April 1-10 palm oil export numbers. Higher Malaysian output and benchmark palm oil futures falling 12 percent in the first quarter of this year could attract demand from top vegetable oil buyers India and China as the tropical oil widens its discount to competing soyoil.
"The MPOB report is likely to be bearish. We will see higher production and weaker exports," said a trader in the Malaysian capital. The benchmark June crude palm oil contract on Bursa Malaysia Derivatives closed 54 ringgit lower to 3,322 ringgit($1,098) per tonne. Overall traded volume stood at 24,305 lots of 25 tonnes each from the usual 15,000 lots.
Technicals have turned negative. Reuters analysis showed palm oil may retrace to 3,250 ringgit per tonne before resuming a rally towards 3,470 ringgit. US crude oil futures hovering near a two-and-a-half year high of $108 a barrel hit in the previous session lent some support to other vegetable oil markets.
Chicago soyoil for May delivery inched up in Asian trade hours, extending gains from the previous session, as analysts expect the US Department of Agriculture to announce a lower soy stock level on Friday. But gains will get capped as key soy producer Brazil is expected to harvest a record 72.2 million tonnes. In China, the most active September soyoil on the Dalian Commodity Exchange closed flat.