KUALA LUMPUR, July 16: Malaysia’s palm oil futures fell across the board on a technical correction, unable to sustain weather-spurred gains which had pushed up prices to their highest levels in 38 months, traders said on Tuesday.

At the close, the new benchmark third-month futures, October, was 36 ringgit lower at $377.63 a ton.

The contract had touched a high of 1,550 ringgit — its highest level since May, 1999 — as the Chicago Board of Trade (CBOT) soybean, corn and wheat futures jumped in active Asian screen trade on poor weekly US crop conditions ratings. Overall volume was a staggering 9,664 lots.

It’s a technical-based correction. I think we all know that yesterday’s rally is hard to digest, said one dealer.

On Monday, cargo surveyor SGS said July 1-15 palm oil exports fell to 366,413 tons against 431,106 tons in June 1-15.

The market ignored the data and instead ended limit-up at 1,473 ringgit ($387.63) a ton, which suggested players were trading on speculation rather than fundamentals, which are not at their best due to prospects of rising output in coming months.

Some dealers said the market could fall to 1,400 ringgit or even lower to 1,370 ringgit because it had failed to close above the 1,500 ringgit resistance level on Tuesday.

We are interfering with God, said a Kuala Lumpur dealer.

So far there are no meteorology departments in the world which say there will be drought in India. They only said the monsoon is delayed. I don’t think our market is technically healthy...it’s technically bizarre, he said.

Worries about a weak monsoon in India have supported the Chicago market as US dealers feared the absence of rains could affect the American oilseed crop. India, the world’s largest edible oil importer, runs a large domestic vegetable oil production deficit.

Respected private forecaster Ivan Wong expected July’s palm oil output to reach as high as one million tons compared with 945,000 tons in June. End-July stocks were estimated at 920,000-930,000 tons, up from 905,000 tons in June.

At the physical market, CPO’s July and August contracts saw bids at 1,445 ringgit in the southern as well as as central regions against sale offers at 1,460 ringgit.—Reuters