Palm falls to near one-month low on falling demand, technical selling

KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in nearly a month in early trade on Monday on falling demand as the supply crunch in the market eased and as technical selling weighed on prices.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 1.2 percent to 2,524 ringgit ($591.52) a tonne at the midday break, in line for its second consecutive session of declines.

It earlier fell to 2,522 ringgit, its lowest level since May 4. Traded volumes stood at 11,179 lots of 25 tonnes each at Monday's midday break.

"Palm fell today on technical play, the market opened lower than Friday's low, triggering some selling pressure," said a futures trader from Kuala Lumpur.

"Physical prices are also lower. Ramadan has started so demand should subside."

Market supplies were tight in the last few weeks on the back of slower-than-expected output growth and as Ramadan demand lowered stockpiles.

The Muslim holy festival, which sees worshippers break day-long fasts with communal feasting, is widely celebrated in regions such as India, the Middle East and Pakistan.

Buyers usually stock up on palm oil a month ahead of Ramadan, which this year began on Saturday, for cooking purposes.

The market lacked bullish factors as there was no trading in related edible oils on the Chicago Board of Trade and China's Dalian Commodity Exchange, which were closed for public holidays, another trader added.

Palm oil is expected to test a support at 2,539 ringgit per tonne, a break below which could cause a further loss to the next support at 2,506 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.