KUALA LUMPUR: Malaysian palm oil futures extended losses for a third straight session on Tuesday, closing at its lowest in nearly six weeks in anticipation of improving production and softer demand.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 67 ringgit, or 1.62%, at 4,047 ringgit ($844.89) a ton, its lowest close since March 7.
Malaysia’s palm oil stocks at end-March fell 10.68% from the previous month to 1.71 million metric tons, the lowest in 10 months, as a surge in exports overshadowed output, according to Malaysian Palm Oil Board data on Monday.
Production increased by 10.57% to 1.39 million tons for the period, the data showed, while exports jumped 28.61% to 1.32 million tons.
Output in the world’s second-largest producer is expected to improve in the second quarter due to favourable weather patterns and improved productivity of newly hired foreign labour, MIDF Research said in a note.
But analysts said the strong exports seen in March are unlikely to sustain in the coming months due to more attractive prices of competing edible oils and as festive demand abates, analysts said.
Exports during April 1-15 rose 9.2% to 633,680 metric tons, from March 1-15, cargo surveyor Intertek Testing Services said. Another surveyor, Amspec Agri Malaysia, said exports rose 28.5% to 697,449 tons. Dalian’s most-active soyoil contract fell 1.74%, while its palm oil contract dropped 2.6%. Soyoil prices on the Chicago Board of Trade were down 1.4%.
“Ongoing South American soybean harvest is likely to set the tone for second edible oil prices,” Kenanga Research said in a note.
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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