* Palm oil slips to lowest since March 5
* Output seen higher, demand seen slowing – broker
* Edible oil prices due for a deep correction – broker
(Updates with closing prices)
By Mei Mei Chu
KUALA LUMPUR, March 18 (Reuters) – Malaysian palm oil futures slumped more than 3% on Thursday to their lowest in two weeks, weighed down by slower demand and higher production concerns.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange ended down 141 ringgit, or 3.58%, at 3,796 ringgit ($923.83) a tonne.
Palm fell to its lowest since March 5 and logged its sharpest daily decline in a month.
“There is a concern for demand in March and April, and production for the first 15 days of March is showing a rapid increase of almost 30%,” said Paramalingam Supramaniam, director at Selangor-based brokerage Pelindung Bestari.
Prices are set for a major correction due to the culmination of very good production with tapering demand, he added.
Dalian’s most-active soyoil contract DBYcv1 fell 1.7%, while its palm oil contract DCPcv1 slipped 0.2%. Soyoil prices on the Chicago Board of Trade BOcv1 were also down 0.7%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
Rival edible oil prices, which have hit multi-year peaks in recent weeks, have also eased as high prices have made them less attractive to buyers, Paramalingam said.
The ringgit =MYR , palm’s currency of trade, strengthened 0.24% against the dollar, making the commodity more expensive for holders of foreign currency.
The stronger ringgit could lead to a more severe price correction for palm oil, Paramalingam added.
Oil prices dropped for a fifth day after official data showed a sustained rise in and fuel inventories, while the pandemic clouded the demand outlook. O/R
Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
($1 = 4.1090 ringgit)
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