Palm falls on slower-than-expected output declines

KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in nearly three weeks on Monday, as traders were bearish over data showing weaker-than-expected output declines.

The benchmark palm oil contract for April delivery on the Bursa Malaysia Derivatives Exchange fell 0.7 percent to 2,274 ringgit ($558.72) a tonne at the midday break.

It had earlier fallen to 2,271 ringgit, its lowest since Jan. 23. Trading volumes stood at 14,952 lots of 25 tonnes each at noon. <1FCPO-TOT>

"The market reacted to estimations from the Malaysia Palm Oil Association, which showed production declining less than earlier polls," said a Kuala Lumpur-based trader, referring to the data showing January output falling 5.7 percent on-month to 1.71 million tonnes.

A Reuters poll had forecast January output falling 10.9 percent from December to 1.61 million tonnes.

"Weak external markets, led by the falls in crude and U.S. soyoil, also weighed on palm," she said.

Another futures trader said that data showing slowing exports during Febuary 1-10 versus the corresponding period last month "should keep the market under pressure until the MPOB data is released."

Exports of Malaysian palm oil products for February 1-10 fell 11.2 percent from January 1-10, according to independent inspection company AmSpec Agri Malaysia.

Data from the MPOB, released at the market's midday break, showed January stockpiles falling 6.7 percent from the previous month to 3 million tonnes, while production fell 3.9 percent to 1.74 million tonnes.

Meanwhile, exports rose 21.2 percent to 1.68 million tonnes in January.

In other related oils, the Chicago March soybean oil contract fell 1 percent, while the May contract on the Dalian Commodity Exchange rose 0.2 percent.

The Dalian January palm oil contract, meanwhile, was down 0.04 percent. Palm oil prices are affected by movements in soyoil rates, as they compete for a share in the global vegetable oil market.

Palm oil may fall into a range of 2,256-2,274 ringgit per tonne, as its uptrend from the Nov. 27, 2018 low of 1,940 ringgit has reversed, said Wang Tao, a Reuters market analyst for commodities and energy technicals.