KUALA LUMPUR: Malaysian palm oil futures dropped over 1 percent at the close of trade on Tuesday, hitting their lowest levels in nearly six weeks, pressured by weaker soyoil prices and a forecast that February palm output will be higher than usual.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 1.4 percent at 2,183 ringgit ($536.50) a tonne at the close of trade in a third straight session of falls.

It earlier fell to an intraday low of 2,166 ringgit, its lowest since Jan. 17.

Trading volumes stood at 52,177 lots of 25 tonnes each at the end of the trading day.

“Production figures were higher, while the market was expecting it to be lower,” said a Kuala Lumpur-based trader, quoting output data from the Malaysian Palm Oil Association that showed a 3.5 percent monthly rise for the Feb. 1-20 period.

Palm oil production typically sees monthly declines in the first quarter of the year, in line with seasonal trend. Traders, however, see output registering higher levels than last year.

Another futures trader said weaker U.S. soyoil on the Chicago Board of Trade also added pressure to palm oil prices.

Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.

The Chicago March soybean oil contract was last down 1 percent, as the rapidly advancing harvest in top exporter Brazil boosts global supplies.

In other related oils, the May soyoil contract on the Dalian Commodity Exchange declined 1.6 percent and the Dalian May palm oil contract was down 2.8 percent.

Palm oil may test a support at 2,190 ringgit per tonne, a break below which could cause a loss into the range of 2,154-2,177 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. – Reuters

Source: https://www.thestar.com.my/business/business-news/2019/02/27/palm-falls-over-1-pct-to-near-6-week-low-on-output-concerns/#EPGOB305DOV7FK7m.99