NEW DELHI: Malaysian palm oil futures fell on Tuesday, weighed down by expectations of higher output and sluggish exports from the world's top producers of the tropical oil.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange was down 0.56% at 1,947 Malaysian ringgit ($470.63) per tonne by the end of the morning session.
"Higher production and weak exports have again started to come into play and that's why we see some weakness in palm oil prices," a Kuala Lumpur-based trader said.
On Monday, Malaysian palm oil futures rebounded from their lowest level in seven months.
On Tuesday, U.S. soyoil futures were up 0.8%. Chicago soybeans added 0.3% to $9.11-1/4 a bushel, having closed down 1.6% on Monday.
Soybean futures have been underpinned by a thaw in U.S.-China trade relations.
The price of palm oil is affected by movements in related edible oils and oilseeds, with which it competes for global market share.
Weak exports will continue to put pressure on palm oil prices, said another dealer from Kuala Lumpur.
On Friday, cargo surveyors Intertek Testing Services said exports of Malaysian palm oil products for June fell 19.9% to 1,343,428 tonnes from 1,677,639 tonnes shipped during May.
Independent inspection company AmSpec Agri Malaysia said exports fell 19.6% month-on-month for the same period.
Expectations of higher output will also put downward pressure on prices, dealers said.
Palm oil production typically rises during the third and fourth quarters, and has tended to peak between August and October in recent years.
Palm oil is still targetting 1,929 ringgit per tonne, as suggested by a projection analysis and a triangle, said Wang Tao, a Reuters analyst for commodities technicals.
Lower crude oil prices also helped keep palm oil lower on Tuesday, traders said.
Oil prices drifted lower on Tuesday, as weak global data raised concerns about future demand for the commodity despite a positive boost from OPEC's decision to extend supply cuts until next March.
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