SINGAPORE: Malaysian palm oil futures gave up gains to close 1% lower on Monday as stronger palm production and cheaper rival oils weighed on the prices.
The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed 46 ringgit at 4,395 ringgit ($1,049.68) a tonne after reaching 4,488 ringgit earlier in the session.
"It is due to higher production in Malaysia," a Kuala Lumpur-based trader told Reuters, citing a report by the Southern Peninsular Palm Oil Millers' Association (SPPOMA).
Palm oil production in Malaysia's southern peninsular states had fallen 0.5% in the September 1-25 period, compared with the same period last month, SPPPOMA data showed on Monday.
Leading industry analyst Dorab Mistry said on Saturday palm prices would start to ease from March on rising output from Indonesia and Malaysia.
Palm dips, posts biggest weekly gain in over a month
The contract was further dragged by cheaper oils on the Dalian Commodity Exchange and the Chicago Board of Trade (CBOT).
Dalian palm oil soybean oil contracts were both down 0.8%, while CBOT soybean oil last fell 1.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Limiting the fall, however, were higher crude prices, making palm oil a more attractive feedstock for biodiesel.
Oil prices rose for a fifth straight day, with Brent at its highest since October 2018 and heading for $80 amid supply concerns.
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