KUALA LUMPUR: Malaysian palm oil futures slipped on Thursday after a four-day climb, though expectations of lower inventories in the world's second largest producer limited losses.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange slid 77 ringgit, or 1.53%, to 4,959 ringgit ($1,180.43) a tonne by the midday break.
"The market is undergoing technical correction after a recent rally turned it overbought," a Kuala Lumpur-based broker said, adding weakness in other commodities markets also helped set off the correction.
The US Department of Agriculture trimmed its 2021/22 crude palm oil production forecast for Malaysia to 18 million tonnes from 18.2 million tonnes, due to the effect of adverse weather from the super typhoon Rai and labour shortages.
Export is forecast to recover slightly to 16.3 million metric tonnes, though the improvement will continue to be restrained by production limitation and how quickly Malaysia is able to resolve the labour issue, the agency said in a report.
Dalian's most-active soyoil contract fell 1.4%, while its palm oil contract slipped 0.9%. Soyoil prices on the Chicago Board of Trade were down 1.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Palm oil may drop to 4,956 ringgit per tonne, due to the completion of a five-wave cycle from 4,668 ringgit, Reuters technical analyst Wang Tao said.
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