Jakarta, July 7 - Malaysian crude palm oil fell 1.35 percent on Wednesday, its fourth day of losses in five, as investors were concerned higher production may overwhelm already slow demand and lead to higher inventories.
The benchmark September contract on Bursa Malaysia's Derivatives Exchange fell 31 ringgit to close at 2,270 ringgit ($704.5) a tonne, a level last seen in mid-November.
Overall volume stood at 13,888 lots of 25 tonnes each, above the usual level of 10,000 lots.
"The market retreated from a firm opening. The upside is limited with better production level," said a trader in a local brokerage firm in Kuala Lumpur.
"Traders expect Malaysian Palm Oil Board report to show an uptick of 6 percent in June production he said.
The Malaysian Palm Oil Board will announce data on June production and inventories next week.
Malaysia's palm oil stocks probably edged 1.8 percent higher in June, reversing a six-month decline, on a production recovery and slightly weaker exports, a Reuters poll showed on Wednesday.
Production likely grew 6 percent to hit a six-month high of 1.47 millikon tonnes, signalling the start of a higher output cycle and a recovery after El Nino-driven hot weather sapped yields in the first quarter of 2010.
Concern about a slowing global economic recovery that may crimp demand for the vegetable oil also weighed the market.
"We only see bearish news now. The sentiment is very weak. There is no demand, no fresh inquiry on the product side. That spurred the sell-off today," said another trader.
Asian stocks slipped on Wednesday as investors worried global growth was faltering, while the euro hovered near a 7-week high as investors shunned long positions in the dollar.
Crude oil dipped on Wednesday, set to stretch its losing streak for the past six trading sessions, as the global investors remained concerned that the world's economic growth was faltering.
But U.S. soyoil for July delivery was trading 0.45 percent higher on Wednesday but the most active January soyoil contract on China's Dalian Commodity Exchange also rose 0.36 percent.
INDONESIA PALM TRADES
The Jakarta-based PT KPB Nusantara, formerly known as the state marketing centre, sold 3,500 tonnes of crude palm oil offered in an auction on Wednesday with the top price at 7,023 rupiah ($0.776) per kg, against 7,014 rupiah per kg on Tuesday.
Producers in Medan, home to Indonesia's main palm oil export port of Belawan, did not hold any auctions.
Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used for cooking oil, unchanged at 7,350 rupiah per kg, from Tuesday.
Seperately, PT Astra Agro Lestari Tbk offered 500 tonnes of palm kernel oil at its auction at $1,045 per tonne. Buyers bid at $1,023 but no deals were done.
