Palm oil extends losses to hit 7-month low on weak demand, higher output
(Recasts with closing price)
By Rajendra Jadhav
MUMBAI, June 28 (Reuters) - Malaysian palm oil futures extended its falling streak on Friday, heading to seven-month lows as sluggish demand and expectations of higher production in coming months weighed on the vegetable oil market.
The benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed down 0.61%, or 12 ringgit, at 1,951 ringgit ($472.40) per tonne, after falling to 1,946 ringgit earlier in the day, the lowest since Nov. 27, 2018.
For the quarter, the oil has shed 7% in what would be its seventh quarterly drop in a row.
"Exports are not picking up despite the correction in prices," said one Kuala Lumpur-based trader, referring to Friday's move.
"On the supply side, production is set to rise in coming months. That will put additional pressure on prices."
Production typically rises during the third and fourth quarters, and has tended to peak between August and October in recent years.
On Tuesday, cargo surveyors Societe Generale de Surveillance and Intertek Testing Services said exports of Malaysian palm oil products for June 1-25 fell 15.3% and 17.8% month-on-month, respectively.
Independent inspection company AmSpec Agri Malaysia said exports fell 14% month-on-month for the same period.
The market has been expecting a rise in demand from India if the annual monsoon rains remain weak there, said another Kuala Lumpur-based trader.
India is the world's biggest importer of palm oil and its monsoon rains were below average for the fourth straight week, with rainfall scanty over central and western parts of the country in the week ended Wednesday, raising concerns about major crop production.
In the United States, excessive rains and flooding have resulted in historic delays in planting corn and soybeans across the Midwest, raising concerns over supplies. But the weather is expected to improve over the next week.
The most-active Chicago Board of Trade (CBOT) soyoil contract added 0.1% and China's Dalian soybean oil prices traded flat.
A bearish target at 1,929 ringgit has been established for palm oil, as it has broken a support at 1,971 ringgit per tonne, Wang Tao, a Reuters analyst for commodities technicals said. ($1 = 68.96 Indian rupees) ($1 = 6.87 Chinese yuan) ($1 = 4.1300 ringgit) (Reporting by Rajendra Jadhav, editing by Louise Heavens)
