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Palm declines ahead of output data, weak demand outlook

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KUALA LUMPUR: Malaysian palm oil futures eased at the close of trade on Monday as the market expects July output to rise amid weak demand.
The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange closed down 0.8% at 1,945 ringgit ($469.92) per tonne, a third session of losses in four.
Palm oil looks neutral in a range of 1,944-1,966 ringgit per tonne, and a breakout could suggest a direction, said Wang Tao, a Reuters market analyst for commodities and energy technicals.
“The market is expecting production to pick up in line with the seasonal trend,” said a Kuala Lumpur based trader, referring to Malaysian production in July.
“(Sentiment is) overall bearish due to weak demand, and the market is taking some gains off the table ahead of the key crop report,” he added, referring to official data release by industry regulator the Malaysian Palm Oil Board (MPOB) for the
month of June.
A Reuters survey showed that June inventories are forecast to fall 4% to 2.35 million tonnes from the previous month. Meanwhile, exports were seen declining 19% to 1.39 million tonnes, and production is expected to ease 8% to 1.54 million tonnes.
Official palm oil data for June will be published by the MPOB ?after 0430 GMT on July 10.
In other related oils, US soyoil futures on the Chicago Board of Trade were up 0.5%, while the September soyoil contract on the Dalian Commodity Exchange rose 0.6%.
The Dalian September palm oil contract was down 0.3%.
Palm oil prices are impacted by movements in related oils, as they compete for a share in the global vegetable oils market.