KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in almost two weeks in early trade on Wednesday as subdued buying from India dampened market sentiment and the latest production figures disappointed traders.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 0.24 percent at 2,479 ringgit ($634.02) a tonne at noon, potentially charting a second day of falls.
Trading volumes were robust, with 28,265 lots of 25 tonnes each during the first half.
"The Indian rupee has fallen a lot, so buying power from India has reduced. Market is expecting India will not buy aggressively for now," said a Kuala Lumpur-based trader.
However, data from Southern Palm Oil Millers Association on Wednesday showing a 22.6 percent fall in production for the Feb. 1-20 period, was likely to lend support. "There could be some short-covering from traders who sold down on Tuesday," the trader added.
Another trader said the market adjusted to lower-than-expected production data from SPPOMA.
"Market had factored in higher production. Given the production recovery in January and February year-on-year, we are expecting higher production this year which will exert pressure on inventory," the trader said.
The market will take further cues from production data on Thursday, the traders said.
The Chicago Board of Trade's March soybean oil contract fell 0.35 percent, while China's Dalian Commodity Exchange remains closed for the Lunar New Year celebrations and will reopen on Thursday.
Palm oil prices are impacted by other rival edible oils as they compete for a share in the global vegetable oils market.
Palm oil was biased to fall into a range of 2,449-2,466 ringgit per tonne, as suggested by a projection analysis and a wedge, Reuters market analyst for commodities and energy technicals, Wang Tao said.
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