Malaysian palm oil futures fell on Monday, tracking competing oils and on slow export demand, after rising to their highest level in a month in early trade, lifted by last week's forecasts of slowing output. The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange dropped 0.6 percent to close at 2,593 ringgit ($633) per tonne, after hitting a one-month high of 2,632 ringgit per tonne earlier in the day.
Trade volumes stood at 42,939 lots of 25 tonnes each on Monday. "The market fell on crude oil and US soyoil easing ... Export estimates suggest a slowdown," said a trader from Kuala Lumpur. "There's also technical selling on an overbought situation." Palm prices had gained last week after experts at an industry conference forecast that palm would trade between 2,700-3,000 ringgit per tonne by June as a crop damaging El Nino impacts yields and lowers annual growth output.
Global output is seen falling by 2-3 million tonnes in 2016. Another trader said the market was earlier supported by the bullish price sentiment, but it later fell on slowing demand. "I feel the market has to correct as it has been artificially pushed up. The main key factor is demand. If real demand comes in, then prices can sustain," he said.
Export data from cargo surveyors showed large jumps in shipments over the first ten days of March from the corresponding period a month ago, but traders said demand is still slow as the numbers were measured from a low base in February. Oil fell around 2 percent on Monday, dipping below the $40 mark, after Iran dashed hopes for a co-ordinated production freeze. In a competing vegetable oil market, May soybean oil on the Dalian Commodity Exchange and the Chicago soyoil contract both fell 0.3 percent.