Crude palm oil futures on Malaysia’s derivatives exchange ended lower, but prices were off intraday lows as Malaysia's palm oil output was sharply lower, leading to a better-than-expected inventory data, trade participants said.
The benchmark February contract on the Bursa Malaysia Derivatives ended MYR5 lower at MYR2,521 a metric ton after moving between MYR2,489 and MYR2,535/ton.
Malaysia's palm oil inventories declined from a ten-month high of 1.97 million tons in October to 1.93 million tons at end-November.
The decline in inventories was in tandem with a 20% decline in November's output, an indication that production may be at the tail-end of a high cycle.
The Malaysian Palm Oil Board estimated November output at 1.60 million tons, down 20% or 388,444 tons from a record high of 1.98 million tons in October.
Ongoing rains and flooding slowed oil palm harvesting in Malaysia, an executive from Malaysia-based plantation firm said.
Output in peninsular Malaysia fell the most, declining 23.6% to 851,410 tons in November as seasonal monsoon rains hit the oil-palm states of Perak, Johor and Pahang, disrupting transportation of oil palms to refineries and ports.
The lower production may limit any further decline in prices.
Traders said technical charts suggest further consolidation is likely in the CPO futures market before prices are ready to scale higher.