Malaysian palm oil futures fell back after reaching a seven-week high on Friday on sustained buying by traders, despite data showing higher production and inventory levels. The benchmark November palm oil contract on the Bursa Malaysia Derivatives Exchange was down 1.1 percent at 2,134 ringgit ($495) a tonne at the end of the trading day, having earlier touched 2,180 ringgit, its highest since July 24.
Volume stood at 45,989 lots of 25 tonnes each, well above the average 35,000 lots usually traded. Data from the Malaysian Palm Oil Board (MPOB), showing a 13 percent rise in production and 10 percent increase in August stockpiles, had little impact.
"There's some good buying interest still in the market ... with low production coming into play in November and December," said a Kuala Lumpur-based trader, who said the MPOB data had minimal impact on palm prices on Friday. "The demand will be there as palm is fairly cheap now compared with other vegetable oils." In competing vegetable oil markets, the most active January soybean oil contract on the Dalian Commodity Exchange was up 0.4 percent. The US December soyoil contract was 0.1 percent down.
Crude oil prices fell on Friday after Goldman Sachs cut its crude forecasts, citing global over-supply and concerns over the Chinese economy. Saudi Arabia's dismissal of the idea of a producer summit also caused oil to slide, despite a strong rally in the previous session. Palm oil often takes price direction from crude oil, as vegetable oils are increasingly used in making renewable fuels.
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