KUALA LUMPUR: Malaysian palm oil futures fell at the midday break on Tuesday, hitting their lowest level in nearly six weeks, pressured by weaker soyoil prices and forecast that February palm output will be higher than usual.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 1.3 percent at 2,184 ringgit ($536.61) a tonne at the midday break, its lowest levels since Jan. 17, and in line for a third straight session of falls.
Trading volumes stood at 22,408 lots of 25 tonnes each at noon.
“Production figures were higher, while the market was expecting it to be lower,“ said a Kuala Lumpur-based trader, quoting output data from the Malaysian Palm Oil Association that showed a 3.5 percent monthly rise for the Feb. 1-20 period.
Palm oil production typically sees monthly declines in the first quarter of the year, in line with seasonal trend.
Traders, however, see output registering higher levels compared to last year.
Another futures trader added that weaker prices of U.S. soyoil on the Chicago Board of Trade also added pressure to palm oil prices.
Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.
The Chicago March soybean oil contract was last down 0.8 percent, as rapidly advancing harvest in top exporter Brazil is boosting global supplies.
In other related oils, the May soyoil contract on the Dalian Commodity Exchange declined 1.2 percent and the Dalian May palm oil contract was down 1.9 percent.
Palm oil may test a support at 2,190 ringgit per tonne, a break below which could cause a loss into the range of 2,154-2,177 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.