KUALA LUMPUR : Malaysian palm oil futures ended higher as the ringgit weakened, after falling earlier in the day to their lowest in more than a month on predictions that rising output of the tropical oil could drag prices to new lows in early 2014. Industry officials at the Globoil Conference in India had warned that crude palm oil prices are poised to slip in the 4 months to as low as 2,000 ringgit, as output peaks in the top two producers Indonesia and Malaysia. “They’re talking about supply coming in, that’s why the market is under tremendous pressure.”

said a trader with a foreign commodities brokerage in Kuala Lumpur. “In the last quarter of the year, production will rise, exports will stay the same, and end-stocks will go up,” the trader added. “The only minor support is the weakness of the ringgit.

By Monday’s close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged up 0.4 percent to 2,309 ringgit ($721) per tonne. Prices in early trade dipped to 2,279 ringgit, the lowest since Aug. 14. 

The Malaysian currency fell more than 1 percent against the U.S. dollar on Monday, improving margins for overseas buyers and stoking demand for the ringgit-priced feedstock.

Total traded volumes stood at 29,253 lots of 25 tonnes each, slightly below the average 35,000 lots.

Despite the forecasts of surging vegetable oil supplies in the coming months, rising demand of palm oil for blending into biodiesel could help curb losses and perhaps even lift prices once stocks start thinning in early 2014. 

Indonesian officials also expect the country’s local consumption of the oil to rise following a government move to increase palm oil use in diesel to 10 percent from 7.5 percent. Malaysia plans make the same 10 percent requirement in its biodiesel policies, a government official said late August.

Export taxes also reinforce the appeal of turning crude palm oil into biofuel for local use, according to James Fry, chairman of commodities consultancy LMC International at the Globoil conference on Saturday. 

Indonesia will retain its export tax for crude palm oil at 9 percent for October. Malaysia, the No.2 producer, has decided to keep its export duty at 4.5 percent, unchanged since March.

In other markets, crude oil rose slightly to hold above $109 a barrel on Monday as upbeat business surveys in China and Europe pointed to stronger oil demand while a possible thaw in U.S.-Iran relations underpinned easing supply concerns.  In vegetable oil markets, the U.S. soyoil contract for December eased 0.2 percent in late Asian trade.  

The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.7 percent upon resuming trade on Monday, after being closed from for the mid-autumn festival.