Malaysian palm oil futures fell more than 1 percent to a fresh three-year low on Thursday, tracking weaker soyaoil on the US Chicago Board of Trade and on worries that rising production would add to inventories. The benchmark palm oil contract for January delivery on the Bursa Malaysia Derivatives Exchange closed down 1.1 percent at 2,088 ringgit ($501.68) a tonne, declining for a third straight session.
It earlier fell as much as 1.5 percent to 2,080 ringgit, its lowest since September 2015. Trading volumes totalled 48,995 lots of 25 tonnes each. A Kuala Lumpur-based trader said palm prices fell in line with soyaoil prices in the United States, "squaring ahead of US Department of Agriculture data tonight, as the government is expected to raise its forecast of US soya stocks."
US soyabeans futures also edged lower on Thursday as the market nervously awaited the latest US Department of Agriculture supply and demand forecast due later in the day. Earlier in the day, palm prices were also lower on production growth, said another Kuala Lumpur-based futures trader, adding that the Malaysian Palm Oil Association reported an 8 percent growth in October output compared with a month earlier.
A Reuters poll this week showed production was expected to rise 5.7 percent to 1.96 million tonnes last month, while inventories were seen climbing 14.1 percent to 2.90 million tonnes. In other related edible oils, the Chicago December soyabean oil contract fell 0.4 percent, while the January soyabean oil contract on the Dalian Commodity Exchange slipped 0.8 percent.
Meanwhile, the January palm oil contract dropped 0.9 percent. Palm oil prices are affected by movements of other edible oils as they compete for a share in the global vegetable oil market. Palm oil is expected to test a support at 2,099 ringgit per tonne, a break below which could cause a loss to 2,075 ringgit, according to Wang Tao, Reuters market analyst for commodities and energy technicals.