Palm declines for third day on forecasts for higher output

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KUALA LUMPUR (Sept 7): Malaysian palm oil futures charted a third consecutive session of losses on Friday evening, tracking weaker edible oils and on expectation that production will rise in the coming weeks, traders said. 

The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was down 0.5% at 2,266 ringgit (US$546.88) a tonne at the close of trade. 

It earlier fell to 2,258 ringgit, its lowest in nearly a week. Palm, however, is up 0.8% this week. 

Trading volumes stood at 29,852 lots of 25 tonnes each at the end of the trading day.

Malaysian markets will be closed on Monday and Tuesday for national holidays. 

"The market is down on production expectations," one Kuala Lumpur-based trader said.    

Another futures trader said the market was also weighed down by weakness in palm olein on China's Dalian Commodity Exchange, adding that the long holiday weekend could cap the upside.

Palm oil production is widely expected to rise in the coming months, in line with seasonal trends. A Reuters poll has forecast August output is likely to have risen 9.9% to 1.65 million tonnes, contributing to higher inventory levels, which are seen hitting a six-month top at 2.41 million tonnes.

Official data from the Malaysian Palm Oil Board is scheduled for release on Sept 12. 

Palm oil could break support at 2,274 ringgit a tonne and fall towards the next support at 2,245 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

The Chicago September soybean oil contract was down 0.2%, while the January soybean oil contract on China's Dalian Commodity Exchange edged up 0.1%.

In related oils, the Dalian January palm oil contract was down 0.7%.  

Palm oil prices are affected by movements of other edible oils that compete in the global vegetable oils market.
    
 Palm, soy and crude oil prices at 1047 GMT

 Contract          Month    Last  Change     Low   High   Volume
 MY PALM OIL       SEP8     2202  -11.00    2201   2218       34
 MY PALM OIL       OCT8     2244  -11.00    2239   2251     1199
 MY PALM OIL       NOV8     2264  -11.00    2258   2274    13397
 CHINA PALM OLEIN  JAN9     4900  -36.00    4872   4972   462816
 CHINA SOYOIL      JAN9     5872   +8.00    5832   5912   469758
 CBOT SOY OIL      SEP8     28.1   -0.06    28.1   28.1      145
 INDIA PALM OIL    SEP8   606.00   -0.50  603.60  606.5      563
 INDIA SOYOIL      SEP8    744.5   -1.45   742.7    745     6560
 NYMEX CRUDE       OCT8    67.76   -0.01   67.63  68.08    90525

 Palm oil prices in Malaysian ringgit per tonne
 CBOT soy oil in U.S. 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 U.S. dollars per barrel
 
(US$1 = 4.1435 ringgit)
(US$1 = 71.7000 Indian rupees)
(US$1 = 6.8394 Chinese yuan)