Malaysian palm oil futures hit their lowest in a week on Thursday, registering a fourth consecutive session of declines on concern over rising production in the coming months.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 0.3 percent to 2,423 ringgit ($625.29) a tonne at the end of the trading day. It earlier fell as much as 1.2 percent to 2,403 ringgit, its weakest since April 4.
Trading volumes stood at 48,336 lots of 25 tonnes each at the close of trade. “Rising production is weighing on prices,” said one Kuala Lumpur-based futures trader.
“The sentiment this month is quite bearish as production is expected to be high,” another futures trader said.
Palm oil production rose to 1.57 million tonnes in March, up 17 percent from the previous month, according to data released by the Malaysian Palm Oil Board this week.
The data also showed that stocks fell by a smaller than expected 6.2 percent to 2.32 million tonnes. A Reuters poll had forecast March end-stocks in Malaysia to decline 8.6 percent from February to 2.27 million tonnes.
Output in the second quarter is expected to rise in line with the seasonal trend, pressuring palm oil prices that are forecast to drop by $40-$50 a tonne from current levels by July-August, analyst Thomas Mielke said on Thursday.
Malaysian palm oil prices were last at $630 a tonne free on board (FOB) on Wednesday.
In related oils, the Chicago Board of Trade’s May soybean oil contract eased by 0.03 percent.
May soybean oil on China’s Dalian Commodity Exchange fell 1.8 percent, while the Dalian May palm oil contract was down 1.5 percent.
Palm oil prices are affected by movements in rival edible oils that compete for a share in the global vegetable oils market.
First Published: IST