Palm Oil Falls for Third Day as Malaysian Inventory Seen Gaining
Category: Oilseeds
(Bloomberg) – Palm oil declined for a third day on speculation that inventories may gain on higher output inMalaysia, the second largest producer, and falling exports.
The July-delivery contract retreated as much as 0.3 percent to 3,453 ringgit ($1,127) a metric ton on the Malaysia Derivatives Exchange and ended the morning session at 3,455 ringgit in Kuala Lumpur.
Production in Malaysia is typically low in January and February and recovers from March onwards. Output gained 2.1 percent to 1.21 million tons last month from 1.19 million tons in February, the Malaysian Palm Oil Board said April 10.
“Improving production in Malaysia is the main reason the market has been down this week,” Ryan Long, vice president of futures and options at OSK Holdings Bhd. (OSK), said by phone from Kuala Lumpur. “Production may be 7 percent to 9 percent higher this month.”
Malaysia’s palm oil exports fell 2.9 percent to 1.04 million tons in the first 25 days of April from the same period in March, surveyor Intertek said today.
“Demand is there and buyers are just waiting for the right time to enter into the market,” Vijay Mehta, a director at Commodity Links Pte., said by phone from Singapore. “Soybean oil is really expensive compared to palm oil, so the entire dependency is on palm now.”
Soybean oil’s premium over palm oil climbed to $100.47 a ton today from $98.33 yesterday, according to data compiled by Bloomberg. Soybeans for July delivery climbed 0.6 percent to $14.73 a bushel on the Chicago Board of Trade. Soybean oil for the same month was little changed to 55.74 cents per pound.
Palm oil for September delivery fell 0.2 percent to 8,772 yuan ($1,392) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month gained 0.3 percent to 9,926 yuan.
To contact the reporters on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net; Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
