Palm oil dips on expected rise in output

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JAKARTA (July 27): Malaysian palm oil futures fell on Friday as expectation of higher output cut short a rally that had lifted prices to a six-day peak earlier in the session.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange fell 0.73% to RM2,185 (US$538.18) a tonne at the end of the week, having touched an intra-day high of RM2,210.

"The market was cashing out profit," one Kuala Lumpur-based trader said. The benchmark gained 2.3% in the previous two days after hitting its lowest level since September 2015.

"Fundamentally, we knew production would pick up, while there won't be much improvement expected on the demand side."

Trading volume totalled 40,089 lots of 25 tonnes each at noon.

Exports of palm oil products from Indonesia, the world's biggest exporter, rose 7.5% in June from a year earlier, Indonesia's palm oil association (GAPKI) said on Friday.      

Despite the shipment increase from Indonesia in June, palm stock remain high at 4.85 million tonnes by the end of last month.

A rise in palm oil output, which seasonally begins in the third quarter of the year, typically adds to inventory levels and weighs on prices, though some plantations have said seasonal output could fall short of forecasts and peak later than usual.

In related oils, the September soybean oil contract on China's Dalian Commodity Exchange was up 0.72%, while the Dalian September palm oil contract rose 0.38%.

The Chicago December soybean oil contract gained 0.35%.

Palm oil prices are usually affected by the performance of other edible oils that compete for a share in the global vegetable oils market.

Palm oil could test resistance at RM2,218 a tonne, a break above which could lead to a gain to the next resistance at RM2,249, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

Palm, soy and crude oil prices at 1050 GMT

Contract          Month  Last   Change  Low    High   Volume
MY PALM OIL       AUG 8   2130     -11   2130   2145     176
MY PALM OIL       SEP 8   2163     -20   2162   2188    3370
MY PALM OIL       OCT 8   2185     -17   2183   2210   15953
CHINA PALM OLEIN  JAN 9   4850      58   4792   4850  210034
CHINA SOYOIL      JAN 9   5780      46   5722   5780  220080
CBOT SOY OIL      DEC 8  28.68    -0.8  28.53  28.79    5954
INDIA PALM OIL    JUL 8    621    -0.8  620.5    624     117
INDIA SOYOIL      AUG 8  742.5   -0.55  740.4  743.6   10220
NYMEX CRUDE       SEP 8  69.46   -0.15  69.27  69.67   66490

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.0600)
(US$1 = 68.7200 Indian rupees)
(US$1 = 6.8290 Chinese yuan renminbi)