Palm heads for 3rd session of fall on forecasts of rising output

KUALA LUMPUR: Malaysian palm oil futures were headed for a third straight session of decline on Thursday as forecasts of rising output, and weaker performing related edible oils weighed on the market.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 0.7 percent at 2,624 ringgit ($612.58) at the midday break.

Palm oil has shed 1.2 percent so far this week and is in line for its first weekly decline in a month and a half.

Traded volumes stood at 32,098 lots of 25 tonnes each at noon on Thursday.

"Today's market is down tracking external activities as well as being cautious of better production forecast," said a Kuala Lumpur-based futures trader.

The market is, however, not sure about the extent of the rise in production, said the trader, supporting palm prices at times.

"We had expected monthly stocks to rise to 2 million tonnes, but until now stocks are at 1.5 million tonnes. So, pricing has been erratic," the trader added.

Last official data showed Malaysia's June end-stocks at 1.52 million tonnes, down 1.9 percent from the previous month.

Inventories and output for July are expected to rise in line with seasonal trend, while cargo surveyor data also showed an increase in demand from Europe and China.

China has bought 12 cargoes of palm oil in the past seven days, the China National Grain and Oils Information Center (CNGOIC) said in a report on Thursday, totalling up to 120,000 tonnes for shipment in the fourth quarter of the year.

China's total stocks at ports are around 320,000 tonnes, below the average of 630,000 tonnes at the same time last year, according to the CNGOIC.

Monthly arrivals in August and September are forecast at over 500,000 tonnes.

In other related oils, the October soybean oil contract on the Chicago Board of Trade was down 0.3 percent, while the January soybean oil on the Dalian Commodity Exchange fell 0.6 percent.

The January palm olein contract dropped 0.3 percent.

Palm oil may retest a support at 2,624 ringgit per tonne, a break below which could cause a further loss to the next support at 2,600 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.