KUALA LUMPUR: Malaysian palm oil futures ended lower on Monday, dragged by weakening rival oils, but prices were capped by industry estimates of tightening December production and stockpile.
The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange closed 17 ringgit, or 0.35%, lower at 4,783 ringgit ($1,132.07) a tonne.
Malaysia's palm oil end-stocks for November beat market surveys with a smaller-than-expected monthly decline of 0.96% as the rise in exports was lower than estimates, Malaysian Palm Oil Board (MPOB) data showed on Friday.
MPOB data has fuelled bearish sentiment, but the market's downside will be limited by continued tight supplies amid seasonal weaker output for December, Refinitiv Commodities Research said in a note.
"Production during the first 10 days of December is assessed down by 2.7% versus the same period last month, a miller's association showed," Refinitiv said.
Palm logs 3% weekly rise but higher Nov stocks weigh
In December, stocks are likely to fall 7.1% month-on-month to 1.69 million tonnes, with output dropping 5% and exports rising 2%, Ivy Ng, regional head of plantations research at CGS-CIMB Research, said in a note.
Tight near-term global edible oil and palm oil inventories will keep prices firm at 4,000-5,000 ringgit per tonne this month and could remain elevated until the first quarter of 2022 when supply is expected to improve, Ng said.
"The strong crude palm oil price and expectations of a gradual return of foreign workers are positives. However, these are offset by concerns over rising fertiliser costs in 2022," she added.
Dalian's most-active soyoil contract slipped 1.4%, while its palm oil contract lost 1.7%. Soyoil prices on the Chicago Board of Trade were up 0.16%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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