Malaysian palm oil futures closed lower on Friday, as rising production dented sentiment and ended three sessions of gains. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange closed down 0.4 percent at 2,221 ringgit ($535.96) a tonne.
It earlier rose to a three-week top of 2,235 ringgit, up 2.2 percent for the week. Trading volumes stood at 34,318 lots of 25 tonnes each at the end of the trading day. A futures trader in Kuala Lumpur said rising production weighed on market sentiment and limited gains.
Palm oil production in Malaysia, the world's second-largest palm producer, typically rises in the third and fourth quarters of the year in line with the seasonal trend. A Reuters survey forecast for September's output to 1.86 million tonnes, up 14.7 percent on August and the strongest production since November. It is the highest September level since 2015.
Inventories are expected to have dropped 0.7 percent from the month before to 2.47 million tonnes, while exports were seen at 1.65 million tonnes in September, a rise of 50 percent on the August level. Palm oil may test a resistance level of 2,240 ringgit, with the next resistance at 2,264 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related oils, the Chicago December soyabean oil contract was last down 0.5 percent. Chinese markets are closed for the week of Oct. 1-5 for the National Day holiday. Palm oil prices are affected by movements of other edible oils, as they compete for a share in the global vegetable oils market.
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