Palm oil charts third day of losses

Malaysian palm oil futures fell over 1 percent on Thursday to their lowest level in two weeks, tracking weakness in related edible oils and on forecasts of rising production. Weaker crude oil prices also weighed on the market. Crude oil prices fell by around 1 percent, coming under pressure from sharp sell-offs in global stock markets, with US stocks posting the biggest daily decline since 2011 to wipe out the year's gains.
Palm oil is used as feedstock to make biodiesel, and is less price competitive when crude oil prices are low. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange was down 1 percent at 2,179 ringgit ($522.79) a tonne at the end of the trading day, a third straight session of declines.
Earlier in the session, it hit its lowest level since Oct. 11 at 2,166 ringgit. Trading volumes stood at 30,038 lots of 25 tonnes each at the close of trade. Earlier falls in soyaoil prices on the US Chicago Board of Trade and China's Dalian Commodity Exchange weighed on palm, said a Kuala Lumpur-based trader. "Our production figures are still rising, it's not good for prices. All in, we're burdened by a massive bearish outlook," he said.
Malaysian palm oil production is seen rising towards the year-end, in line with seasonal trend, before tapering off early next year. Palm oil inventories in September rose to their highest in eight months as production levels came in higher than exports. In other related oils, the Chicago December soyabean oil contract was slightly up 0.03 percent while the January soyabean oil contract on the Dalian Commodity Exchange fell as much as 0.9 percent.
Meanwhile, the Dalian January palm oil contract dropped 1.3 percent. Palm oil prices are affected by movements of other edible oils as they compete for a share in the global vegetable oils market. Palm oil may fall to 2,175 ringgit as it has broken a support at 2,199 ringgit per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.