KUALA LUMPUR (Reuters) - Malaysian palm oil futures hit their lowest in a week in early trade on Thursday, in line for a fourth consecutive session of declines, on concerns of rising production in the coming months.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 0.6 percent to 2,416 ringgit a tonne at the midday break, slightly off a low of 2,414 ringgit, its weakest since April 4.
Trading volumes stood at 19,054 lots of 25 tonnes each at the midday break.
“Rising production is weighing down on prices,” said a Kuala Lumpur-based futures trader.
“The sentiment this month is quite bearish as production is expected to be high,” said another futures trader.
Palm oil production rose 17.2 percent to 1.57 million tonnes in March from the previous month, according to data released by the Malaysian Palm Oil Board earlier this week.
The data also showed that stocks fell 6.2 percent to 2.32 million tonnes, a decline that is smaller than expected. A Reuters poll had forecast March end-stocks in Malaysia to decline 8.6 percent from February to 2.27 million tonnes.
Output in the second quarter is expected to rise in line with the seasonal trend, pressuring palm oil prices which are forecast to fall by $40-50 a tonne from current levels by July-August, according to leading analyst Thomas Mielke on Thursday.
Malaysian palm oil prices were last at $630 a tonne on free-on-board basis on Wednesday.
In related oils, the Chicago Board of Trade’s May soybean oil contract was slightly up 0.03 percent.
Meanwhile, the May soybean oil on China’s Dalian Commodity Exchange fell 1.2 percent, while the Dalian May palm oil contract was down 0.8 percent.
Palm oil prices are impacted by movements in rival edible oils as they compete for a share in the global vegetable oils market.
Reporting by Emily Chow; Editing by Sunil Nair