Palm oil dropped for a third day to the lowest level in more than two weeks on speculation that exports from Malaysia, the second-biggest grower, may slow after the Muslim festival of Eid at the end of this month.
The November-delivery contract fell 0.6 per cent to 2,975 ringgit ($995) per metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur, the lowest close since August 10. Futures lost 0.9 per cent lost week for a fifth weekly decline.
There will be an "expected slowdown in demand starting next month after Ramadan," said Ryan Long, vice president of futures & options at OSK Investment Bank. "The selling pressure is still there. Generally the sentiment is still quite bad, ignoring the rather supportive fundamentals for palm."
Buyers increased purchases to meet demand ahead of Eid. Palm oil exports from Malaysia climbed 6.3 per cent to 1.36 million tons in the first 25 days of August compared with the previous month, surveyor Intertek said yesterday. That was less than the 48 per cent rise in the first 10 days of August and a 26 per cent gain in the first 15 days. Shipments rose 5.5 per cent in the first 25 days of August, according to Societe Generale de Surveillance.
Malaysia's palm oil production probably gained 5 per cent in the first 20 days of this month, Long said, citing estimates from a local planters' association.
"Many people expected output to be down, but they're reporting positive numbers," Long said.
Production in Indonesia and Malaysia typically drops during Ramadan, which began on August 1 this year, as labourers work fewer hours and go on leave during the Eid holiday.