Malaysian palm oil futures fell for a third consecutive session to reach the weakest level in more than four months, tracking declining soyaoil on Monday evening. Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange dropped 1.7 percent at 2,723 ringgit ($612.60) a tonne by the end of the trading day. It earlier fell to 2,717 ringgit, its lowest since November 2.
Palm shed more than 3 percent last week, its biggest single-day drop in three weeks on Friday due to weakness in rival soyaoil and poor demand. Traded volumes stood at 65,176 lots of 25 tonnes each on Monday evening. "Palm fell as soyabean oil is cheap," said a palm oil trader, rendering soyaoil more competitive in relation to the tropical oil.
Palm oil prices are impacted by the movements of related oils, including soyaoil, as they compete for a share in the global vegetable oils market. In related vegetable oils, soyabean oil on the Chicago Board of Trade was down 0.4 percent, while the May soyabean oil contract on the Dalian Commodity Exchange fell 0.2 percent.
The May contract for palm olein on the Dalian Commodity Exchange was up 0.7 percent. The market was in positive territory earlier, supported by indications that March output was down, while technical buying also lifted the market, said another trader. Data from industry regulator the Malaysian Palm Oil Board (MPOB) showed that production in February fell 1.4 percent to 1.26 million tonnes, its lowest since March 2016, and its fifth consecutive monthly decline.
February inventories also fell to a six-year low of 1.46 million tonnes, down 5.3 percent on month. Output in Malaysia, the world's second largest palm producer after Indonesia, is seen recovering this year from the dry weather effects of a crop-damaging El Nino. Leading analysts at an industry conference last week expected that prices would drop to levels around 2,500 ringgit by mid-year on a recovery in production. Palm oil may revisit its February 28 low of 2,723 ringgit, as its downtrend from the January 18 high of 3,175 ringgit per tonne could have resumed, said Wang Tao, a Reuters market analyst for commodities and energy technicals.