Palm falls 3.6 percent on supply glut

BANGKOK: Malaysian palm oil futures fell more than 3 percent on Friday and were expected to remain under pressure until at least the start of 2019 due to high inventories, traders said.

The benchmark palm oil contract for February delivery on the Bursa

Malaysia Derivatives Exchange fell 3.6 percent to 1,975 ringgit ($471.36) per tonne at the midday break. The January contract had hit its lowest since August 2015 at 1,965 ringgit on Wednesday.

Trading volumes stood at 76,061 lots of 25 tonnes each at the close of trade.

Traders said the market was oversold and that inventories were expected to peak near the end of the year.

"Prices are near the lows and could move higher early next year," said one Kuala Lumpur-based trader.

"The market is factoring in weakness because of higher inventory and production," said David Ng, a palm trader at Philip Futures.

Stockpiles at the end of October increased 7.6 percent from the previous month to 2.72 million tonnes, while production rose 6 percent to 1.96 million tonnes, official data from the Malaysian Palm Oil Board showed on Monday.

Inventories in top producers Indonesia and Malaysia were expected to rise for the next two months, with demand unlikely to jump from key buyers as palm oil solidifies in winter months.

In other related edible oils, the Chicago December soybean oil contract was down 0.76 percent.

On the Dalian Commodity Exchange, the January soybean oil contract on the  rose 1.15 percent while the January palm oil contract rose 0.37 percent.