Palm Oil Drops First Time in Five Days on Europe Crisis Concern
24/05/2012 (Bloomberg) - Palm oil declined for the first time in five days on concern that the European debt crisis will worsen, potentially hurting demand for commodities.
The August-delivery contract fell as much as 2 percent to 3,049 ringgit ($971) a metric ton on the Malaysia Derivatives Exchange and ended the morning session at 3,061 ringgit in Kuala Lumpur. Futures have lost 3.6 percent this year.
The prospect of Greece leaving the 17-nation euro region increased after the May 6 elections led to a hung Parliament, with politicians failing to form a government. European Union leaders will meet in Brussels today to discuss how to revive growth. Palm oil exports from Indonesia may exceed 1.45 million tons next month as a reduction in taxes spurs demand, according to PT Sinar Mas Agro Resources and Technology.
“The economic concerns in Europe are having a positive impact on the dollar, pushing commodity prices lower,” Ambika T.B., an analyst with Karvy Comtrade Ltd., said in a phone interview from Hyderabad. “A slowdown in the Chinese economy is also worrying for palm oil.”
Commodities as measured by the Standard & Poor’s GSCI Index of 24 raw materials dropped as much as 0.6 percent to 624.57, the lowest level since Dec. 20, as the dollar strengthened against most of its major peers.
Indonesia, the world’s largest palm oil producer, may cut the tax on crude palm oil exports to 18 percent in June from 19.5 percent this month, Susanto, head of marketing at the Indonesian Palm Oil Association, said yesterday.
A rally in soybean prices may boost Japan’s imports of palm oil to a record 600,000 tons this year from 557,937 tons the previous year, according to Yoshinori Komura, managing director of the Japan Oilseed Processors Association said.
Soybeans for July delivery declined 0.7 percent to $13.72 a bushel on the Chicago Board of Trade. Soybean oil for delivery in the same month slid 0.8 percent to 50.07 cents a pound.
Palm oil for September delivery fell 2 percent to 7,932 yuan ($1,253) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month declined 1.8 percent to 9,126 yuan a ton.