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Palm oil hits over 1-week low on expectations of higher output
[KUALA LUMPUR] Malaysian palm oil futures fell to their lowest in over a week on Monday, tracking rival oils and as expectations of a pick up in output offset improving export demand.
Benchmark palm oil futures for November on the Bursa Malaysia Derivatives Exchange fell 1.4 per cent to RM2,543 per tonne in the evening. It reached a low of RM2,530, its weakest levels since Aug. 12 and matching the intraday low on Aug 16.
Traded volumes stood at 47,396 lots of 25 tonnes each on Monday evening, above the 2015 average of 44,600.
"The market has priced in exports. Now it will be looking at negative news," said a Kuala Lumpur-based trader, referring to forecasts for higher production in August.
A second trader said palm was dragged down by weaker rival oils on China's Dalian Commodity Exchange: "Dalian shows weakness, so traders are taking the opportunity to take profit."
Palm gained over the past three weeks on Malaysian exports, which according to cargo surveyors rose 25 to 27 per cent between Aug 1-20 versus the same period in July.
Tight supplies due to the impact of dry weather linked to an El Nino weather pattern also helped prices. However, the effect of El Nino is now expected to wane due to a seasonal pick up in output.
Palm oil production rose 3.5 percent month-on-month in July, its strongest levels in eight months.
Palm oil may drop towards a support at RM2,509, as it has broken a support at RM2,570, Reuters market analyst for commodities and energy technicals Wang Tao said.
In related vegetable oils, the Chicago Board of Trade soybean oil December contract fell 1.4 per cent, while the January soybean oil contract on the Dalian Commodity Exchange declined 0.9 per cent.