VEGOILS-Palm oil falls on higher-than-expected output estimates


By Mei Mei Chu

KUALA LUMPUR, June 24 (Reuters) - Malaysian palm oil futures slipped on Thursday, declining for the third time in four sessions, after an industry group estimated a jump in production.

The benchmark palm oil contract FCPOc3 for September delivery on the Bursa Malaysia Derivatives Exchange slid 31 ringgit, or 0.9%, to 3,414 ringgit ($819.88) a tonne by the midday break.

The higher-than-expected production estimates from the Malaysian Palm Oil Association (MPOA) and weakness in Chicago soyoil futures is weighing on palm, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.

MPOA forecast crude palm oil production during June 1-20 rose 15% from the month before, traders said on Wednesday.

"The lack of fresh destination demand is also weighing on the palm oil prices," Bagani said.

Palm oil prices have declined about 24% since peaking at a record high in mid-May.

Crude palm oil price may see some recovery after this sharp correction, but we believe the peak cycle is over with the current prices already factoring in the tight vegetable oil supply over the next 6-8 months, analysts at UOB KayHian said in a note.

The vegetable oil market may be supported by stronger-than-expected biodiesel demand from the recovery in crude oil prices, economies reopening or higher mandate from producing countries, they added.

Dalian's most-active soyoil contract DBYcv1 fell 0.3%, while its palm oil contract DCPcv1 declined 1.6%. Soyoil prices on the Chicago Board of Trade BOcv1 were down 0.9%.

Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.

Palm oil may retest a resistance at 3,506 ringgit per tonne, a break above which could lead to a gain to 3,602 ringgit, Reuters technical analyst Wang Tao said. TECH/C

($1 = 4.1640 ringgit)


(Reporting by Mei Mei Chu; Editing by Amy Caren Daniel)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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