KUALA LUMPUR: Malaysian palm oil futures closed more than 1% lower on Wednesday, extending losses for a second consecutive session, as the market tracked rival Chicago soyaoil’s overnight slump after forecast for wet weather in the US growing areas eased concerns about unfavourable crop conditions.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed down 60 ringgit, or 1.56%, at 3,791 ringgit ($911.30) a tonne, after hitting a low of 3.6% earlier.
On the Chicago Board of Trade (CBOT), soya futures closed sharply lower on Tuesday, as forecasts for cooler weather in the US Midwest eased concerns about unfavourable weather hurting crop yields.
Anticipation of better exports from Indonesia compared with Malaysia following top buyer India’s move to reduce import duty for palm olein also added to selling pressure, a Kuala Lumpur-based trader said.
However, the Malaysian Palm Oil Association’s (MPOA’s) forecast of a 1.6% monthly rise in June production prevented further meltdown, the trader added.
MPOA’s forecast was much lower than a Reuters survey on Monday estimating June production to rise 7%.
Refinitiv Commodities Research raised its 2020/21 output projections for top producer Indonesia to 47.3 million tonnes, up 1% from its previous update after firm production last month.
It lowered its outlook for Malaysia by 2.2% from its last update to 18.4 million tonnes due to labour constraints, wet weather conditions, lower fertiliser application in the previous years and disruptions from Covid-19 induced lockdowns.
The US Department of Agriculture rated 59% of U.S soyabeans crop in good-to-excellent condition in a weekly report on Tuesday, down from 60% a week ago.
Soyaoil prices gained 1.3%, after slumping 5.6% in the previous session. Dalian’s most-active soyaoil contract fell 1.4%, while its palm oil contract declined 1.5%.