KUALA LUMPUR: Malaysian palm oil futures dropped on Tuesday evening, falling from a near four-month high the previous session, due to expectations of a rise in production in the coming months.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 0.8 percent to 2,654 ringgit ($619.51) at the close of trade, near its intraday low of 2,652 ringgit.
Traded volumes stood at 38,429 lots of 25 tonnes each at the end of the trading day.
"The market was earlier up, reacting to higher Dalian," said a Kuala Lumpur-based futures trader, referring to the Dalian Commodity Exchange in China. "But anticipation of higher production, especially due to improvement in production in (the Malaysian state of) Sabah, pressured the market."
"Lower soyoil on the Chicago Board of Trade will also pressure the market," the trader added.
Production gains in the east Malaysian state of Sabah, the country's largest producing region, is seen rebounding the most on a post-El Nino recovery compared with other states.
Traders, however, are unsure about the extent of production gains, as planters say palm trees are still seeing some lingering effects of the 2015 crop-damaging El Nino.
In other related oils, the October soybean oil contract on the Chicago Board of Trade fell 0.9 percent, while the September soybean oil on the Dalian Commodity Exchange was up 0.5 percent.
The September palm olein contract dropped 0.3 percent. Palm oil prices are impacted by related edible oils, as they compete for a share in the global vegetable oils market.
Palm oil faces strong resistance at 2,697 ringgit per tonne, and it may hover below this level or retrace towards a support at 2,638 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
Comments
Comments are closed for this article.