Palm drops to 2-year low on rising output, weak US soy
Category: Oilseeds
(Reuters) – Malaysian palm oil futures tumbled on Monday to their lowest in two years, hurt by rising inventories and steep losses in U.S. soybeans on expectations of higher output.
Bearish views by industry analysts at a vegetable oil conference also weighed on palm oil prices.
Prices could drop to 2,600 ringgit-2,700 ringgit per tonne till the end of this year, top analyst Dorab Mistry, head of edible oil trading with Indian conglomerate Godrej Industries, said at the Globoil India conference.
Other analysts at the meet expressed similar views.
Prices may drop to 2,575 ringgit per tonne in the last quarter of 2012 from current levels if Brent crude oil prices come down to $95 per barrel, James Fry, chairman of commodities consultancy LMC International, said on Saturday.
By 0408 GMT, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost more than 6 percent to 2,589 ringgit ($846) per tonne, up slightly from the intraday low at 2,577 ringgit — a level unseen since September 2010.
“Prices have come to a two-year low, it’s not something that’s surprising. In the month of September and October, we see a higher inventory, and it’s something of a seasonality factor,” said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.
“Last year we saw a year-low on Oct. 6, so we are quite close to that.”
Palm oil stocks in No.2 producer Malaysia stood at a 10-month high of 2.1 million tonnes in August, and traders said stocks could climb higher in September on strong production.
Other vegetable oil markets also suffered steep losses on rising U.S. soybean output and unfavourable economic sentiment.
By 0407 GMT, U.S. soyoil for December delivery had lost 2.7 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 3.2 percent lower by the midday break, after touching the lowest level since Aug. 6.
Chicago soybeans slid almost 2 percent to fall below $16 a bushel for the first time since mid-August on expectations of higher U.S. output and slowing Chinese demand.
