Palm oil drops to 15-week low on hopes of rising output

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SINGAPORE (Feb 21): Malaysian palm oil futures slid for a fourth consecutive session on Tuesday, hitting their lowest in 15 weeks as expectations of higher production and ample supplies of rival soybean oil weighed on the market.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange closed down 1.7% to RM2,782 (US$624.4) a tonne by the mid-day break. Earlier in the session, they hit a low RM2,777, the weakest since Nov 8.

Traded volumes stood at 73,468 lots of 25 tonnes each at the end of the morning session.

"Production is picking up, which is a bearish signal, and we are seeing plenty of soyoil supplies," said one Kuala Lumpur-based trader.

Palm's fresh fruit yields are still suffering the effects of a crop-damaging El Nino, but expectations of a recovery by the second half of the year are weighing on prices, according to industry analysts.

Exports of Malaysian palm oil products during Feb 1–20 fell 0.8% to 733,288 tonnes from 739,367 tonnes shipped a month ago, cargo surveyor Intertek Testing Services said on Monday.

But another cargo surveyor, Societe Generale de Surveillance, said exports during the period rose 1.7% to 745,564 tonnes from 733,002 tonnes shipped during Jan 1–20.

Technicals called for palm oil to rebound. Palm oil is due for a bounce, as suggested by it wave pattern, a falling channel and the hourly RSI, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

In competing vegetable oils, soybean oil on the Chicago Board of Trade eased 0.6%, while the most-active contract for Dalian palm olein fell 0.4%.

(US$1 = RM4.4555)

Palm, soy and crude oil prices at 1014 GMT

Contract        Month    Last   Change     Low    High  Volume
MY PALM OIL      MAR7    3024   -49.00    3016    3095    1458
MY PALM OIL      APR7    2872   -53.00    2864    2952    9636
MY PALM OIL      MAY7    2782   -49.00    2777    2860   34470
CHINA PALM OLEIN MAY7    5898   -24.00    5856    5944  608438
CHINA SOYOIL     MAY7    6670   -22.00    6632    6722  453510
CBOT SOY OIL     MAR7   32.71    -7.90   32.62   33.18   12207
INDIA PALM OIL   FEB7  547.60    -7.90  546.50  557.10    1182
INDIA SOYOIL     MAR7  655.90    -3.50  654.50  663.55   31840
NYMEX CRUDE      MAR7   54.00    +0.60   53.35   54.00   12738

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