Palm oil futures ticked lower on Tuesday, dropping for the first time in seven sessions after data showed Malaysian palm oil inventories fell less than expected last month while exports slid. The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange closed down 0.1% to 2,900 ringgit ($695.44) at the end of the morning session.
The market had earlier risen to its highest since February 2017 at 2,929 ringgit a tonne. Malaysia's palm oil inventories fell to a three-month low in November as a seasonal decline in production curbed yields in the world's second-biggest producer, while exports dropped on slowing purchases by top importers.
Stockpiles slid to 2.26 million tonnes, down 4.1% from the previous month, industry regulator the Malaysian Palm Oil Board (MPOB) said on Tuesday. This compared with a Reuters survey forecasting reserves to drop 5.7% to 2.22 million tonnes.
Exports of Malaysian palm oil products for Dec. 1-10 fell 11.3% from a month ago, according to an independent inspection company AmSpec Agri Malaysia. "Considering the heavily overdone price levels versus lower demand by around 12% in December, it seems reasonable that prices retrace to more realistic levels," said Marcello Cultrera, institutional sales manager at Phillip Futures in Kuala Lumpur.
Dry weather and lower fertiliser use, a move adopted by some growers to save costs, have affected output this year at top producers Indonesia and Malaysia, and will continue to be a factor in the coming years, an industry analyst said last month.
Elsewhere, Dalian's most-active soyaoil contract traded down 0.2%, while its palm oil contract traded 0.2% higher. Soyaoil prices on the Chicago Board of Trade eased 0.3%. In the previous session, palm oil futures overtook soyaoil prices on the Chicago Board of Trade and climbed to near 3-year high amid fears of a sharp fall in supply.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market. Palm oil is poised to break a resistance at 2,911 ringgit per tonne and rise to 2,969 ringgit, Reuters technical analyst Wang Tao said.