Malaysian palm oil futures fell for a third straight day on Thursday, dipping to their lowest in more than a month, as concern over surging Southeast Asian supply of the tropical oil kept investors on edge.
Traders and analysts widely expect output in top producers Malaysia and Indonesia to pick up from September, as the peak palm oil production season kicks off, adding pressure to prices that have lost almost seven per cent this year.
Some market players say Malaysia’s palm oil output could hit a record this year. The No.2 producer has churned out about 630,000 tonnes more crude palm oil in the period from January to August over the corresponding 2012 period, data from industry regulator the Malaysian Palm Oil Board shows.
"Many people are now reporting double-digit growth in production for September. That could be one cause why the market is drifting lower," a trader with a foreign commodities brokerage said.
The monsoon season, which brings rain to the oil palm-growing parts of Malaysia, could also further lift yields, the Kuala Lumpur-based trader said.
"This time round the high cycle is a little delayed — if the monsoon comes in October, it will encourage flowering, and production could see a sudden big pick-up."
The benchmark December contract on the Bursa Malaysia Derivatives Exchange had dipped to RM2,265 per tonne, the lowest since August 12, before pulling up slightly to end at RM2,268 by Thursday’s close, marking a loss of 1.1 per cent.
Total traded volumes stood at 24,809 lots of 25 tonnes each, lower than the average 35,000 lots.
Exports of Malaysian palm oil products rose between 6.4 per cent and 6.5 per cent in the September 1-25 period from a month ago, according to cargo surveyor data, as shipments to India and Europe picked up and helped offset weaker Chinese demand.
In other markets, oil prices gained slightly despite easing geopolitical worries and an improving supply picture, as traders sought bargains after sharp losses earlier this month.
In vegetable oil markets, the US soyoil contract for December eased 0.4 per cent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange also fell 0.4 per cent.-- Reuters