Global stocks and commodities markets fell on Monday as the United States and China appeared at a deadlock over trade negotiations on Sunday, with Washington demanding promises of concrete changes to Chinese law and Beijing saying it would not swallow any "bitter fruit" that harmed its interests.
Benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was last down 0.6% at 1,972 ringgit ($473.75) a tonne at Monday's midday break, after losing 1.3% last week.
The market earlier fell to 1,960 ringgit, its lowest levels since November 27.
"It looks like the market is heading lower due to the (U.S.-China) trade tensions, and is partly down on expectations of higher output in the coming months," said a Kuala Lumpur-based trader.
"Malaysian palm production could rise from May onwards on a seasonal basis," he said, but added that the occurrence of Ramadan, the Muslim fasting month, could curb output as well.
Ramadan, which began on May 5 this year, sees Muslims worldwide fast from dawn to dusk. This slows down productivity in oil palm estates, as many workers are from Muslim-majority Indonesian and work in plantation estates is labour-intensive.
Industry regulator from the Malaysian Palm Oil Board last showed that production in April fell 1.4% from the previous month to 1.65 million tonnes, while inventories fell 6.6% to 2.73 million tonnes.
Palm oil may fall into a range of 1,953-1,967 ringgit per tonne, said Reuters market analyst for commodities and energy technicals Wang Tao.
In related oils, the Chicago July soybean oil contract dropped 1.6%, while the May soyoil contract on the Dalian Commodity Exchange traded flat.