KUALA LUMPUR: Malaysian palm oil futures fell on Monday after hitting a near one-week high as traders sold on expectations of rising output and weakening export demand.
Benchmark palm oil futures for May on the Bursa Malaysia Derivatives Exchange closed down 1.85 per cent at 2,754 ringgit ($620.69) a tonne having hit 2,815 ringgit earlier in the day, its highest level since Feb 21. Traded volumes stood at 52,131 lots of 25 tonnes each.
Palm oil output is expected to recover by the second quarter of the year while exports so far in February have declined after a surge in demand the previous month due to Lunar New Year celebrations in China, when consumption typically rises. Palm has fallen for two consecutive weeks and has lost more than 8pc since Feb 13.
“The market has resumed selling which started two weeks ago, but is trading in a range without any bullish indicators as it looks for new leads,” said a futures trader from Kuala Lumpur.
Demand would be the key factor to support palm oil prices as output is largely expected to recover this year from the dry weather effects of the crop-damaging El Nino, the trader said.
Palm oil shipments from Malaysia, the world’s second-largest palm oil producer after Indonesia, however, fell 1.9pc between Feb. 1 and Feb 25 from the same period last month, according to data from cargo surveyor Intertek Testing Services.
Published in Dawn, February 28th, 2017
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