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KUALA LUMPUR: Malaysian palm oil futures fell for a third day on Wednesday to their lowest levels in two weeks, pressured by expectations of rising production amid lacklustre demand.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed down 26 ringgit, or 0.75%, to 3,431 ringgit ($773.62) a tonne, its lowest since May 3.

The Southern Peninsular Palm Oil Millers Association (SPPOMA) forecast production during May 1-15 to jump 16.72% from the same week in April, traders and analysts said.

Palm closes at near two-week low on higher supply outlook

“The overall market trend remains under pressure with competing edible oils fighting for demand in India and China,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.

Top producer Indonesia lowered its crude palm oil reference price to $893.23 per tonne for the period of May 16-31, a trade ministry decree published on Monday showed, making its products more attractive than Malaysian palm oil.

That cast a negative spin on Malaysia’s palm olein, with many refiners clamouring to sell June contacts, he said.

The selling pressure was equally felt in most by-products, with rumours of massive inflows of refined palm oil from Indonesia, he added.

Top buyer India slashed the base import prices of crude palm oil and soyoil, the government said late on Monday.

Dalian’s most active soyoil contract lost 2.2%, while its palm oil contract fell 1.8%. Soyoil prices on the Chicago Board of Trade were up 0.6%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Capping losses, the ringgit, palm’s currency of trade, fell 0.7% against the dollar, making the commodity cheaper for buyers holding foreign currency.

Malaysia is committed to progressively raising its biodiesel mandate, commodities minister Fadillah Yusof said at a meeting with global palm oil producers on Wednesday.

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