The benchmark September contract on the Bursa Malaysia Derivatives exchange ended MYR11 lower at MYR2,335 a metric ton, off its intraday low of MYR2,328/ton.
Prices have declined 2.7% this week and may fall further next week, as "there's a big possibility we'll see a double-digit rise in July production," a senior trading executive at a Kuala Lumpur-based brokerage said.
Forays by soyoil and crude oil futures into positive territory in Asian trading hours helped cap CPO's losses. But with the Chicago Board of Trade closed Monday for a public holiday, leaving CPO without cues from its main competitor, soyoil, some market participants squared off positions towards the end of trade.
More weakness is likely due to a seasonal increase in palm oil supply in the July-September period, Siegfried Falk, a Hamburg-based analyst and co-editor at Oil World, said.
Still, a sufficiently sharp fall in prices could bring palm olein back to a discount to rival soyoil, after trading at a premium since late last year, shifting buyers' attention away from palm.
"Palm oil may develop a small price discount in the coming weeks (and) regain market share," Falk told Dow Jones Newswires by email.
Palm oil products have lost ground this year as soyoil prices tumbled on the back of strong supply prospects from South American harvests. Palm olein was recently trading at a $20-a-ton premium to soyoil, compared with a discount of more than $100/ton in December.
In the cash market, palm olein for July was offered unchanged at $790/ton and cash CPO at MYR2,440/ton, also unchanged.
CME Group Inc.'s dollar-based CPO futures contract for September wasn't traded in Asia, while rupiah-denominated September CPO futures on the Indonesia Commodity and Derivative Exchange was trading 0.4% higher at IDR6,285 a kilogram at 0945 GMT, with 128 lots done.
The October contract was trading 0.6% higher at IDR6,285/kg with 145 lots changing hands. One lot is equivalent to 10 tons.
Open interest on the BMD was 72,093 lots, compared with 72,242 lots Thursday. One lot is equivalent to 25 tons.
A total of 8,941 lots of CPO were traded versus 13,225 lots Thursday.
Closing BMD CPO futures prices in MYR/ton at 1000 GMT: Month Close Previous Change High Low Jul'10 2,406 2,411 Down 5 2,410 2,400 Aug'10 2,358 2,370 Down 12 2,367 2,353 Sep'10 2,335 2,346 Down 11 2,346 2,328 Oct'10 2,322 2,331 Down 9 2,333 2,315 By Shie-Lynn Lim, Dow Jones Newswires; +603 2026 1233; firstname.lastname@example.org