KUALA LUMPUR: Malaysian palm oil futures fell to its lowest in a week at the midday break on Tuesday, in line to chart a second day of loss, as concerns of high inventory levels in the world's second largest producer persist.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 2,159 ringgit ($523.39) a tonne at the midday break. It earlier fell to 2,156 ringgit, its lowest levels since April 16.
Palm oil is biased to break a support at 2,155 ringgit per tonne and fall towards the next support at 2,110 ringgit, following its failure to break a resistance at 2,227 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
"Production is not coming down, and demand has not been so great. There is a worry that end-stocks is not reducing," said a futures trader in Kuala Lumpur.
He added that palm oil production throughout Malaysia so far this month is showing monthly gains of 2-5 percent.
Higher output levels would contribute towards a rise in stockpiles, which last year hit its highest levels in at least 18 years. <MYPOMS-TPO>
Inventories had last declined 4.6 percent to 2.92 million tonnes at end-March, while production rose to 1.67 million tonnes, up 8.3 percent from February.
Data from cargo surveyors Societe Generale de Surveillance and Intertek Testing Services showed export gains of 1.5-2.2 percent for the April 1-20 period.
Independent inspection company AmSpec Agri Malaysia, however, reported a 1.8 percent drop for the same duration.
In other related oils, the Chicago May soybean oil contract fell 0.1 percent, and the May soyoil contract on the
Dalian Commodity Exchange was down 0.2 percent. Meanwhile, the Dalian May palm oil contract declined 0.5 percent.
Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.
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