14/06/2011 (Business Recorder) - Malaysian palm oil futures hit over one-month lows on Monday, extending losses from the previous session, as expectations of stronger output and higher stocks continue to weigh.

"Fundamentally, high stocks and improving production triggered a sell-off among the people who went for a long position," said a trader in Kuala Lumpur.

Palm oil prices, which lost 5.3 percent last week, was pressured by data that showed stocks in Malaysia in May rose 15 percent to a 16-month high of 1.92 million tonnes from April.

By midday, the benchmark August crude palm oil contract on Bursa Malaysia Derivatives fell half percent to 3,224 ringgit ($1,067.196) per tonne after going as low as 3,199 ringgit -- a level unseen since May 9.

Overall traded volume was 9,795 lots of 25 tonnes each, lower than the usual 12,500 lots.

Talks about Indonesia to reduce palm oil export tariff also weighed on palm oil futures. The palm oil tax aims to ensure domestic requirements are met in world's No. 1 producer and reduce volatility in local cooking oil prices.

A lower export tax compared to the current 17.5 percent level could see Malaysian refiners buy more in anticipation of stronger demand ahead of Ramadan, which is due to start in August.

"If the export tax is lowered in July we may see more imports to Malaysia," said another trader.

He added: "The Indonesian government will have to adjust its crude palm oil base price or tax structure in order to keep its market share."

Crude oil edged lower on Monday due to growing concerns about a slowdown in the United States and other industrialised economies and expectations that top exporter Saudi Arabia would increase output.

Other vegetable oils were mixed.

US soyoil for July delivery inched down in Asian trade hours, while the most active January soyoil contract on China's Dalian Commodity Exchange lost 0.4 percent at 0730 GMT.

"China's commodities and stocks were pressured by weak global economy outlook and expectations that China's May inflation rate will increase," said Zhan Zhi Hong, an oil analyst with Shenzhen-based China Merchant Futures.

"Higher inflation rate could prompt a stringent control policy as the current demand-supply scenario is not strong enough to offset the losses."