KUALA LUMPUR: Malaysian palm oil futures inched lower on Tuesday and were set for a fourth straight monthly decline, as expectations grew of an improvement in production.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange had slid 4 ringgit, or 0.1%, to 4,170 ringgit ($930.18) a tonne by the midday break. Palm has fallen 2.8% so far in the month.
Bursa Malaysia will be closed on Wednesday for a public holiday.
“In the month of September, all eyes will be on Malaysian production numbers,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Palm output in the world’s second largest producer is expected to rise as plantations enter the peak production months, but exports are likely to slow due to competitive pricing in larger rival Indonesia, he added.
Top producer Indonesia extended an export levy waiver until Oct. 31 to maintain price stability, but raised its crude palm oil reference price for the Sept. 1-15 period.
Indonesia waiving levy indicates a need to move supplies as the pace of production picks up, Paramalingam added.
In related oils, Dalian’s most-active soyoil contract fell 1.5%, while its palm oil contract dropped 2.1%. Soyoil prices on the Chicago Board of Trade slipped 1.1%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may test a support at 4,085 ringgit per tonne, a break below may open the way towards 3,857 ringgit, Reuters technical analyst Wang Tao said.
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