Palm oil tracks drop in soyoil, lower output hopes limit fall

Malaysian palm oil futures fell on Thursday, tracking weakness in rival soyoil prices, though hopes for lower output in July as heavy rains hit top producers Indonesia and Malaysia helped limit the fall.

Palm oil for October delivery on the Bursa Malaysia Derivatives Exchange fell 9 ringgit, or 0.34%, to 2,647 ringgit ($622.97) a tonne as of 0241 GMT.

FUNDAMENTALS

The Council of Palm Oil Producing Countries (CPOPC) on Wednesday said the prospect of a La Nina weather pattern bringing wetter-than-normal weather to Indonesia and Malaysia could hit crop production.

CPOPC forecast Indonesia's crude palm oil production in 2020 would be 1-2 million tonnes below last year's 44 million tonnes, while output in Malaysia is expected to drop 4.3% to 19 million tonnes.

The Malaysian Palm Oil Association forecast crude palm oil production during July 1-20 to have fallen 8.9% from the month before, traders said on Wednesday.

Malaysia's palm oil exports in July 1-20 fell 10.5% from the month before to 1,089,021 tonnes, cargo surveyor SGS said.

Dalian's most-active soyoil contract fell 1.8%, while its palm oil contract dropped 1.15%. Soyoil prices on the Chicago Board of Trade were down 0.95%.

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 test a support at 2,624 ringgit per tonne, following its failure to break a resistance at 2,703 ringgit, Reuters technical analyst Wang Tao said.

MARKET NEWS

Asian stocks were likely to come under pressure on Thursday as fresh diplomatic tensions between Washington and Beijing heightened investor jitters and overshadowed the boost to Wall Street from U.S. stimulus hopes.