KUALA LUMPUR: Malaysian palm oil futures fell from a seven-week high reached in early trade on Tuesday, as traders sold on expectations of rising production for the month of July. The market was higher earlier, tracking gains in rival edible oils, before easing to be flat at the midday break. The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.4 percent at 2,583 ringgit ($601.26) a tonne on Tuesday evening. It earlier hit a high of 2,614 ringgit a tonne, its strongest level since May 23.
Traded volumes stood at 39,734 lots of 25 tonnes each at the close of trade. A Kuala Lumpur-based trader said the market fell based on forecasts that July production levels will be higher on-month from 1.51 million tonnes reached in June. “Some are saying production this month will be up by about 15 percent,” he said. Another trader added that weaker demand also contributed to palm’s decline in the evening. Palm oil shipments from Malaysia, the world’s second largest producer after Indonesia, fell during the July 1-10 period, down 1.9 percent from the corresponding period in June, showed data from cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, showed exports up 3.8 percent during the same period.
In related vegetable oils, soybean oil on the Chicago Board of Trade posted its strongest daily gains in four months in overnight trade, curing to a four-month high before dipping 0.X percent. September soybean oil on the Dalian Commodity Exchange rose 1.4 percent, while the September palm olein contract was up 0.4 percent. Palm oil competes with related oils such as soy for a share in the global vegetable oils market. Palm oil has been on an uptrend this week, in line with soyoil and on expectations of falling output. June production in Malaysia, the world’s No.2 palm producer, fell 8.5 percent to 1.51 million tonnes, leading to a decline in end-stocks as well, data from the Malaysian Palm Oil Board showed on Monday.
