Malaysian palm oil futures fell on Monday, retreating from their highest level in a week following a forecast of ballooning production for 2018-2019 compared with the preceding period.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange fell 1.8 percent to 2,149 ringgit ($527.49) a tonne.
Last Friday, palm rose 3.2 percent, the largest intraday gain since October 2016.
The futures turned south after hitting their highest level in a week in the first half session on Monday that was boosted by strength in other edible oils and expectations of a trade deal between China and the United States.
Traders said the market was reacting to the higher production forecasts by leading industry analyst Thomas Mielke earlier in the day.
"(The) market is expecting stocks to remain elevated," a trader based in Kuala Lumpur said.
Mielke, speaking at a seminar, said global palm oil production is expected to rise to 74.9 million tonnes for 2018-2019, as prices of the commodity likely improve this year.
The forecast is a significant hike from the 70.5 million tonnes of palm oil produced in the 2017/18 period, according to data from the US Department of Agriculture.
In the near term, the market held a bearish outlook for February, expecting weak exports and only a small inventory drop, another trader said.
Palm prices had declined 3 percent last week due to weaker exports and high inventories.
Traders are awaiting the start of an industry conference this week to further gauge the outlook for the palm oil market.
In other related oils, the Chicago March soyabean oil contract was last up 0.2 percent on Monday.
The May soyaoil contract on the Dalian Commodity Exchange gained 0.9 percent and the Dalian May palm oil contract rose 1.6 percent. Palm oil prices are affected by movements in soyaoil, as they compete for a share in the global vegetable oil market.