Malaysian palm oil futures on Monday hit a two-week low, recording a second straight session of declines, as prices were weighed down by prospects of improving levels in production. Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange was down 1.2 percent at 3,036 ringgit ($682.71) a tonne at the close of trade. It earlier fell to 3,019 ringgit, palm's weakest levels since January 31.
Traded volumes stood at 68,361 lots of 25 tonnes each in the evening. "Production figures are bearish (on prices) as it is seen picking up in February. Production is coming in and the flood season is over," said a futures trader from Kuala Lumpur, however, adding there may not be a steep decline in prices.
"The market is still holding at the 3,013 ringgit levels. Spot month prices are still very strong." Increasing output of the tropical oil, as the effects of the crop-damaging El Nino fade out, could ease palm's benchmark prices, which are trading at a more than four-year high now. Production for January declined 13.4 percent to 1.28 million tonnes, its sharpest drop in a year, according to data from the Malaysian Palm Oil Board on Friday.
Heavy rainfall across the east coast of Peninsular Malaysia also had an impact on output last month, as floods hindered the fruit-harvesting process. Palm oil may drop to 3,014 ringgit per tonne, as it has broken a support at 3,089 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao. In other related edible oils, the March soyabean oil contract on the Chicago Board of Trade declined as much as 0.8 percent, while the May soyabean oil contract on the Dalian Commodity Exchange fell 0.8 percent. The May contract for Dalian palm olein dropped as much as 1.6 percent.
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