KUALA LUMPUR: Malaysian palm oil futures fell to a one-month low late on Monday, charting a second consecutive session of declines weighed down by expectations of weaker demand and stronger than expected output levels in the coming weeks.

Traders also said the market was under pressure from a stronger ringgit, which usually makes the edible oil more expensive for foreign buyers.

The ringgit gained 0.3 per cent against the dollar on Monday evening at 4.0650. The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange dropped 2pc at 2,212 ringgit ($544.16) a tonne at the close of trade, its lowest levels since January 18. Trading volumes stood at 39,281 lots of 25 tonnes each at the close of trade.

“The ringgit is stronger, and there is also higher production expected in February and March,” said a Kuala Lumpur based trader. While palm oil seasonally sees monthly production declines through the first quarter of the year, industry players are expecting output to register higher levels compared to last year.

Latest official data showed that palm oil output in Malaysia fell 3.9pc in January to 1.74 million tonnes from the previous month.

The levels, however, were higher than the 1.59m tonnes of recorded production in January last year, and 1.28 million tonnes in 2017.

Another Malaysian trader said that talk of trade agreements between the US and China dampened market sentiment about palm oil.

“For me, this news is not so good for palm as China will buy soy, hence reducing their palm oil imports,” he said.

President Donald Trump said on Sunday he would delay an increase in US tariffs on Chinese goods, thanks to “productive” trade talks and that he and Chinese President Xi Jinping would meet to seal a deal if progress continued.

Published in Dawn, February 26th, 2019