Palm oil falls over two percent, tracking weakness in rival oils and poor demand

Malaysian palm oil futures fell more than 2 percent on Friday, tracking weakness in rival oils and on weak export data and mixed forecasts at an industry conference this week. Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange were down for a second straight day, by 2.4 percent at 2,771 ringgit ($623) a tonne at the close of trade, their sharpest daily drop in three weeks.
Earlier in the session, they fell to their lowest point since February 28 at 2,769 ringgit. Palm oil shed 3.2 percent this week, its third weekly decline in four. Traded volumes totalled 46,425 lots of 25 tonnes each on Friday.
"The market is adjusting to exports estimates and the Malaysian Palm Oil Board figures on demand," said a futures trader from Kuala Lumpur, adding that the weakness in Dalian was also a contributing factor to the market decline. Palm oil shipments from Malaysia fell 25 percent in the first 10 days of March versus the corresponding period a month ago, cargo surveyor data showed.
Another trader said palm had been hit by bearish data from the US Department of Agriculture, and on bearish sentiment from an industry conference. US soyabean supplies will be bigger than expected at the end of the 2016/17 marketing year as a record harvest in Brazil will flood the global market, cutting into demand for US exports, the government said on Thursday.
Leading analysts at an industry conference on Wednesday said present price levels are unsustainable, and are seen declining to 2,500 ringgit a tonne around mid-year as production rebounds. Malaysia's palm oil stocks at the end of February fell 5.3 percent from a month earlier to 1.46 million tonnes, the lowest levels in six years, industry regulator Malaysian Palm Oil Board (MPOB) said on Friday. Output levels fell 1.4 percent to 1.26 million tonnes. In other related oils, soyabean oil on the Chicago Board of Trade fell 0.8 percent, while the May soyabean oil contract on the Dalian Commodity Exchange dropped 1.8 percent. The May contract for palm olein on the Dalian Commodity Exchange fell 1.7 percent.