Palm production increases, causing a fourth consecutive session of declines

Malaysian palm futures dropped for the fourth session in a row on Thursday, closing at their lowest level since October 1. This was due to expectations that production would increase. However, strong competition oils prevented further losses.

At the close, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange was down 3 ringgit or 0.07% to 4,012 Ringgit ($910.78) per metric ton.

The contract climbed as high as 1.57 percent in the first session, following rivals vegetable oils and crude petroleum before falling.

A Kuala Lumpur based trader stated that "when the Dalian market shut down, without any other influence, the market resumed their selling pressure due to rising production and future exports being lower because of current volatility."

Dalian's palm oil contract, which is the most active contract in Dalian, gained 1.21%. Chicago Board of Trade Soyoil Prices were up by 0.02%.

As palm oil competes to gain a share in the global vegetable oils industry, it tracks the price changes of competing edible oils.

The oil prices continued to rise on the prospect of tighter supplies after U.S. imposed additional sanctions against Iran's oil trade, and some OPEC producers promised further production cuts.

Palm oil is a better option as a biodiesel feedstock due to the strong crude oil price.

A circular posted on the website of the Malaysian Palm Oil Board on Tuesday showed that Malaysia had maintained its 10% export tax on crude palm oil for May and reduced its reference price.

According to cargo surveyor Intertek Testing Services, and independent inspection company AmSpec Agri Malaysia, exports of Malaysian products containing palm oil for the period April 1-15 rose between 13.6% and 17% from a year ago. ($1 = 4.4050 ringgit)

(source: Reuters)