July 6, 2018 / 5:28 AM / 9 months ago

Vegoils: Palm oil hits nearly two-week low on higher production outlook

KUALA LUMPUR (Reuters) - Malaysian palm oil futures fell to their lowest in nearly two weeks on Friday evening, marking a fourth session of declines, on expectations of higher production this month.

A worker shows palm oil fruits at palm oil plantation in Topoyo village in Mamuju, Indonesia, Sulawesi Island, March 25, 2017 in this photo taken by Antara Foto. Picture taken March 25, 2017. Antara Foto/Akbar Tado/via REUTERS/Files

Earlier in the session, the market was trading sideways on caution over the China-U.S. trade spat, traders said.

The benchmark palm oil contract for September delivery on the Bursa Malaysia Derivatives Exchange was down 0.9 percent at 2,264 ringgit ($560.67) a tonne on Friday evening, its lowest since June 25.

Palm slipped 2.7 percent for the week, as lean demand weighed on prices.

Trading volumes stood at 35,079 lots of 25 tonnes each.

“The market is reacting to estimates of rising production in July,” said a futures trader in Kuala Lumpur, adding that the market was also cautious over the start of the China-U.S. trade tariffs.

U.S. tariffs on $34 billion worth of Chinese imports took effect as a deadline passed on Friday, and with Beijing having vowed to respond immediately in kind, the world’s two biggest economies took a high-stakes turn towards an all-out trade war.

Malaysian palm oil production is expected to increase this month after a decline in June. According to a Reuters poll, production is expected to fall 11.1 percent in June to 1.36 million tonnes, its lowest since February.

Official June data by the Malaysian Palm Oil Board will be released on July 10.

In other related oils, the Chicago December soybean oil contract was trading flat, as of 1026 GMT, while the September soybean oil on China’s Dalian Commodity Exchange climbed 0.7 percent.

Meanwhile, the Dalian September palm oil contract edged 0.04 percent higher.

Palm oil prices track the performance of other edible oils as they compete for a share in the global vegetable oils market.

Reporting by Emily Chow; Editing by Sunil Nair and Sherry Jacob-Phillips

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