KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in a month on Monday, due to lower demand as a supply crunch eased and as technical selling weighed on prices.
The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange fell 1.5 percent to 2,516 ringgit ($589.16) a tonne at the close of trade, its second consecutive session of declines.
Earlier in the session, it had touched 2,509 ringgit, its lowest level since April 28. Traded volumes stood at 36,845 lots of 25 tonnes each at Monday' close of trade.
"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 demand for the Muslim fasting month of Ramadan reduced stockpiles.
Ramadan, which sees worshippers break day-long fasts with communal feasting, is widely celebrated in India, the Middle East and Pakistan. Buyers usually stock up on palm oil a month before Ramadan, which this year began on Saturday.
There was no support from trading in related edible oils with the Chicago Board of Trade and China's Dalian Commodity Exchange both closed for public holidays, a trader said.
Palm oil is expected to test 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.
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