KUALA LUMPUR: Malaysian palm oil futures slid to their lowest in more than 11 months on Wednesday, dragged by fears of abundant global oilseed supplies, and as estimates for an uptick in palm oil output this month turned investors wary.

The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,247 ringgit in late trade, a level last seen on Aug. 12, 2013, before settling at 2,254 ringgit ($712) per tonne by the day’s close, a 1.1 per cent drop.

Total traded volume stood at 48,914 lots of 25 tonnes, above the daily average of 35,000 lots.

The Malaysian Palm Oil Association, a group of growers, forecast palm oil output in the world’s No. 2 producer to rise 16.3pc between July 1-20 compared to a month ago, raising investor concerns and pressuring palm prices that have chalked up losses of nearly 7pc in July.

Some market participants, however, said the higher output could be due to early harvesting of palm fruit before plantation workers go on holiday for the Eidul Fitr celebrations.

“Prices came down because of talks that the first twenty days’ production is higher,” said a trader with a local commodities brokerage in Kuala Lumpur.

“But not everyone is really convinced to sell, because there’s usually some early harvesting.”

“Production will most likely fall during the last five days of July. For the full month, we expect production to be unchanged (from last month),” the trader added.—Reuters

Published in Dawn, July 24th, 2014