KUALA LUMPUR: Malaysian palm oil futures reversed early gains on Tuesday as profit-taking and a sharp decline in August exports pulled down prices from record highs scaled last week.
The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange closed down 84 ringgit, or 1.9%, at 4,363 ringgit ($1,029.98) a tonne, after rising 1.9% in intraday trade.
Prices rose earlier on short-covering due to persistent talks of production losses in both Malaysia and Indonesia, and expectations of lower palm oil carryover stocks for the new season, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
Anticipation of Indonesia's crude palm oil (CPO) export duties for September rising to $166 per tonne from $93 in August also supported prices as it would benefit Malaysia's exports, Bagani said.
Malaysia's palm oil exports during Aug. 1-15 fell between 15% and 24% from the same period in July, cargo surveyors said on Monday.
"Oil World is expecting crude palm oil prices to weaken by end-Dec 2021 and will continue to see more weakness in 1H22 with the assumption of no weather disruptions," UOB KayHian said in a note.
Oil World Executive Director Thomas Mielke forecast Indonesia's free-on-board (FOB) CPO prices to fall to $1,000 a tonne by end-December, and range between $800 and $850 during the first half of next year, UOB said.
This is due to expectations of stronger global edible oil supplies in 2021/22 after record high prices last year boosted plantings, and demand rationing due to high prices, UOB said.
Mielke pegged world palm oil production to rise by 2.1 million tonnes in 2020/21, and by 3.8 million tonnes next season, but low opening stocks will offset production growth, according to UOB.
Dalian's most-active soyoil contract gained 0.6%, while its palm oil contract rose 0.5%. Soyoil prices on the Chicago Board of Trade fell 0.6%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.