Palm oil dips on expected rise in output

Malaysian palm oil futures fell on Friday as expectation of higher output cut short a rally that had lifted prices to a six-day peak earlier in the session. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange fell 0.73 percent to 2,185 ringgit ($538.18) a tonne at the end of the week, having touched an intra-day high of 2,210 ringgit.
"The market was cashing out profit," one Kuala Lumpur-based trader said. The benchmark gained 2.3 percent in the previous two days after hitting its lowest level since September 2015.
"Fundamentally, we knew production would pick up, while there won't be much improvement expected on the demand side."
Trading volume totalled 40,089 lots of 25 tonnes each at noon. Exports of palm oil products from Indonesia, the world's biggest exporter, rose 7.5 percent in June from a year earlier, Indonesia's palm oil association (GAPKI) said on Friday.
Despite the shipment increase from Indonesia in June, palm stock remain high at 4.85 million tonnes by the end of last month.
A rise in palm oil output, which seasonally begins in the third quarter of the year, typically adds to inventory levels and weighs on prices, though some plantations have said seasonal output could fall short of forecasts and peak later than usual.
In related oils, the September soyabean oil contract on China's Dalian Commodity Exchange was up 0.72 percent, while the Dalian September palm oil contract rose 0.38 percent.
The Chicago December soyabean oil contract gained 0.35 percent.
Palm oil prices are usually affected by the performance of other edible oils that compete for a share in the global vegetable oils market.
Palm oil could test resistance at 2,218 ringgit a tonne, a break above which could lead to a gain to the next resistance at 2,249 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.