Malaysian palm oil futures reversed their previous growth and closed lower on Tuesday as traders weighed expectations of increased production against improved export demand.

The contract for palm oil delivery in September on the Malaysian Derivatives Exchange Bursa fell by 32 ringgit, or 0.82%, to 3,888 ringgit (USD 835.23) per metric ton.

Exports from Malaysia from July 1 to July 10 increased by 18.7-26.1%, according to data from surveying companies Amspec Agri and Intertek Testing Services.

According to the Southern Peninsula Palm Oil Producers Association, production from July 1 to July 10 increased by 5.93% compared to the same period in June, according to traders and analysts.

“We expect stock levels to remain at the same level or slightly increase as July’s production is expected to grow only by high single digits, with a slight increase in monthly exports,” said UOB KayHian brokerage firm, as reported by Reuters.

Crude palm oil prices are expected to rise due to a slower-than-expected peak production season and current weather risks for palm, soybean, and other vegetable oils.

Palm oil stocks in Malaysia increased by 1.9% to 1.72 million metric tons at the end of June compared to the previous month, which is much lower than expected, according to data from the Malaysian Palm Oil Council.

The condition of soybean crops in the US improved over the past week after rainfall in the drought-hit areas of the US, although they remained the worst in over a decade, while the condition of spring wheat deteriorated, according to US government data on Monday.

Soybean oil prices on the Chicago Mercantile Exchange fell by 0.7%. The most active Dalian contract for soybean oil rose by 0.4%, while the contract for palm oil increased by 0.8%.

Palm oil is influenced by price fluctuations in related oils as they compete for market share in the global vegetable oil market.

(1 US dollar = 4.6550 ringgit)