Malaysian palm oil futures declined at their sharpest daily rate in two weeks by the end of trade on Thursday, snapping two sessions of gains, on bearish official data on December inventories, production and exports. The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 0.9 percent to 2,163 ringgit ($528.21) a tonne at the close of trade, its biggest daily decline since Dec. 26 and coming off a near three-week high it hit in the previous trading session.
It earlier fell as much as 1.5 percent to an intraday low of 2,150 ringgit. Trading volumes stood at 35,351 lots of 25 tonnes each at the end of the trading day. Data from industry regulator the Malaysian Palm Oil Board (MPOB), released after the market paused for the midday break, showed end-stocks rising 6.9 percent from the previous month to 3.21 million tonnes.
Inventory levels are at their highest in at least 19 years, according to Refinitiv Eikon data. Meanwhile, December production fell 2 percent from the previous month to 1.81 million tonnes while exports edged up 0.6 percent from November to 1.38 million tonnes, according to MPOB data.
"Exports came in lower than expected and with high imports, stocks are above our estimates, which is considered bearish," said a Kuala Lumpur-based trader. Another trader also said the decline in December's production was lower than expected. A Reuters survey had forecast palm oil's end-December stockpiles edging up 4.3 percent to 3.14 million tonnes, while production was seen falling 3.6 percent to 1.78 million tonnes. Exports were also forecast to gain 4.7 percent to 1.44 million tonnes.
Palm oil may fall to 2,150 ringgit per tonne, as it failed again to break a resistance at 2,198 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
In other related oils, the Chicago March soyabean oil contract was down 0.03 percent, while the March soyabean oil contract on the Dalian Commodity Exchange fell 0.2 percent. Meanwhile, the Dalian January palm oil contract rose 1.2 percent. Palm oil prices are impacted by changes in soyaoil prices, as they compete for a share in the global vegetable oil market.