KUALA LUMPUR: Malaysian palm oil futures closed lower on Tuesday for a second consecutive session, hitting a near two-week low on fears of rising production.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange, which rolled over to a new month, closed down 54 ringgit, or 1.54%, to 3,458 ringgit ($779.71) a tonne, its lowest since May 3.

The market sees supply outlook in August to be much better, despite nearby tightness, where April stocks were at a 13-month low, said Sathia Varqa, co-founder of Singapore-based Palm Oil Analytics.

Palm oil ends lower on rising output

“Palm is now firmly under the thumb of bearish sentiment and hooked on rising production,” he said.

Exports from Malaysia during the May 1-15 period rose 4% from the same period in April, according to cargo surveyor Intertek Testing Services on Monday. AmSpec Agri Malaysia, another cargo surveyor, said exports rose 5.2%.

Top producer Indonesia set its crude palm oil reference price at $893.23 per tonne for the period of May 16-31, a trade ministry decree published on Monday showed.

Meanwhile, India, the world’s biggest edible oil buyer, slashed base import prices of crude palm oil and soyoil, the government said in a statement late on Monday.

Soyoil prices on the Chicago Board of Trade were down 1% amid forecasts of record U.S. production. Dalian’s most-active soyoil contract fell 0.8%, while its palm oil contract lost 0.8%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.