Palm hits one-week low as high stocks worries persist

KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in a week on Tuesday, their second straight day of losses as concerns persisted over high inventory levels in the world's second largest producer.

The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange closed down 0.1 percent at 2,170 ringgit ($526.06) a tonne, after earlier hitting 2,152 ringgit, its lowest since April 16.

Palm oil is biased towards breaking support at 2,155 ringgit per tonne and falling towards 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 are not reducing," said a futures trader in Kuala Lumpur.

He added that palm oil production throughout Malaysia so far this month was showing a monthly gain of 2-5 percent.

Higher output levels would contribute towards a rise in stockpiles, which last year hit their highest in at least 18 years. <MYPOMS-TPO>

Inventories last declined 4.6 percent to 2.92 million tonnes at the end of 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 April 1-20.

Independent inspection company AmSpec Agri Malaysia, however, reported a 1.8 percent drop for the same period.

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 1.1 percent.

Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.