Malaysian palm oil futures fell on Wednesday on an unexpected rise in production and a slightly stronger ringgit, resuming its downtrend after a one-session rise. The January benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange lost 2.2 percent to 2,330 ringgit ($534.40) a tonne at the end of the day.
"The market is on the bearish side, people never expected production to be quite good," said a trader based in Kuala Lumpur, adding his outlook for export demand to slow in November and December. "Buying will be slow." Palm oil prices fell after the Malaysian Palm Oil Board reported a surprise rise in October's output, which contributed to fresh 15-year high end-stocks. The market also weakened on slowing export data from cargo surveyors and a stronger ringgit.
Malaysia's palm exports in the first ten days of November fell 5.3 percent compared with the same period a month ago, according to data from cargo surveyor Intertek Testing Services. Traded volume stood at 45,121 lots of 25 tonnes each, above the average 35,000 lots usually traded in each session. Palm oil is expected to test a support at 2,319 ringgit per tonne, with a good chance of breaking below this level and falling more towards the next support at 2,232 ringgit, according to Wang Tao, a Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the US December soyoil contract lost 0.6 percent, while the January soybean oil contract on the Dalian Commodity Exchange dropped 1.4 percent.
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