Malaysian palm oil price drops to 15-week low on hopes of rising output


Malaysian palm oil futures slid for a fourth consecutive session on Tuesday, hitting their lowest in 15 weeks as expectations of higher production and ample supplies of rival soybean oil weighed on the market.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange closed down 1.7 percent to 2,782 ringgit ($624.4) a tonne by the mid-day break. Earlier in the session, they hit a low 2,777 ringgit, the weakest since Nov. 8.

Traded volumes stood at 73,468 lots of 25 tonnes each at the end of the morning session.

"Production is picking up, which is a bearish signal, and we are seeing plenty of soyoil supplies," said one Kuala Lumpur-based trader.

Palm's fresh fruit yields are still suffering the effects of a crop-damaging El Nino, but expectations of a recovery by the second half of the year are weighing on prices, according to industry analysts.

Exports of Malaysian palm oil products during Feb.1-20 fell 0.8 percent to 733,288 tonnes from 739,367 tonnes shipped a month ago, cargo surveyor Intertek Testing Services said on Monday.

But another cargo surveyor, Societe Generale de Surveillance, said exports during the period rose 1.7 percent to 745,564 tonnes from 733,002 tonnes shipped during Jan. 1-20.

Technicals called for palm oil to rebound. Palm oil is due for a bounce, as suggested by it wave pattern, a falling channel and the hourly RSI, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

In competing vegetable oils, soybean oil on the Chicago Board of Trade eased 0.6 percent, while the most-active contract for Dalian palm olein fell 0.4 percent.


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