Palm drops to near 3-month low on rising output, weaker rival oils

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KUALA LUMPUR (Feb 16): Malaysian palm oil futures fell to their lowest in nearly three months on Thursday evening, weighed down by expectations of rising output and tracking weaker performing rival oils.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange were down 1.3% to RM2,929 (US$658.05) a tonne at the end of the trading day. They earlier hit an intraday low of RM2,925, the weakest since Nov 22.

Traded volumes stood at 70,395 lots of 25 tonnes each in the evening.

Traders said the market dipped on expectations of rising February output. "Overseas markets also weakened," said a futures trader from Kuala Lumpur, referring to rival edible oils on the Chicago Board of Trade and China's Dalian Commodity Exchange.  

Palm oil prices have been trading at over four-year highs on tight market supplies, as the lingering effects of a crop damaging El Nino and monsoon floods lowered output in January.

Production declined 13.4% for the full month of January, its sharpest drop in a year, according to data from industry regulator the Malaysian Palm Oil Board.

Output, however, is seen rebounding in February, in line with the seasonal trend and as the El Nino's dry weather effects wear off.

Palm oil may retest a support at RM2,959 per tonne, a break below which could open the way towards the next support at RM2,879, according to analysis by Wang Tao, a Reuters market analyst for commodities and energy technicals.

In other related edible oils, the March soybean oil contract on the Chicago Board of Trade fell 0.5%, while the May soybean oil contract on the Dalian Commodity Exchange was down 0.6%.

The May contract for Dalian palm olein also declined 1%.

Palm oil prices are influenced by the movements of related oils, as they compete for a share in the global vegetable oils market.

Palm, soy and crude oil prices at 1134 GMT

Contract          Month    Last  Change     Low   High   Volume
MY PALM OIL       MAR7     3151  -42.00    3150   3211     1571
MY PALM OIL       APR7     3021  -43.00    3020   3079    18996
MY PALM OIL       MAY7     2926  -39.00    2925   2986    29705
CHINA PALM OLEIN  MAY7     6044  -58.00    6038   6156   654178
CHINA SOYOIL      MAY7     6800  -42.00    6800   6872   404834
CBOT SOY OIL      MAR7    33.76   -0.18   33.67  34.09    14662
INDIA PALM OIL    FEB7   564.00   -7.10  562.00    570     1046
INDIA SOYOIL      FEB7   681.45   -7.05   680.5  686.4     3560
NYMEX CRUDE       MAR7    53.42   +0.31   52.95  53.44    50463

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 = RM4.4510)
(US$1 = 67.0675 Indian rupees)
(US$1 = 6.8560 Chinese yuan)