MARKET DEVELOPMENT
Palm Oil Drops as Production Seen Outpacing Demand After Ramadan
Palm Oil Drops as Production Seen Outpacing Demand After Ramadan
22/05/2013 (Bloomberg) - Palm oil declined for a second day after Godrej International Ltd. forecast a plunge in prices on output gains in Indonesia and Malaysia, the largest producers.
The contract for August delivery fell as much as 0.6 percent to 2,321 ringgit ($771) a metric ton on the Bursa Malaysia Derivatives, before ending the morning session at 2,327 ringgit in Kuala Lumpur.
The commodity may drop to 2,000 ringgit from July, Dorab Mistry, director at Godrej told Rishaad Salamat on Bloomberg Television’s “On the Move” today. That decline may come after prices gain next month on increased demand ahead of the Muslim fasting month of Ramadan, Mistry said. Purchases from the Middle East and South Asia usually climb before Ramadan, which starts in July this year, when communal meals boost total consumption.
“It doesn’t bode well for inventory levels,” said Arhnue Tan, an analyst with Alliance Investment Bank Bhd. “There’s a risk for it rising again, especially if production continues to trend upwards,” she said, referring to Malaysia’s stockpiles that dropped 11 percent to 1.93 million tons last month.
Shipments from the second-largest producer fell 9.4 percent to 799,405 tons in first 20 days of May from a month ago, according to Intertek. The expected surge in exports before Ramadan “doesn’t seem to be kicking in yet,” Tan said.
Refined palm oil for September delivery fell 0.5 percent to 6,014 yuan ($981) a ton on the Dalian Commodity Exchange, while soybean oil dropped 0.6 percent to 7,438 yuan. On the Chicago Board of Trade, soybeans for July delivery rose 0.2 percent to $14.67 a bushel and soybean oil for the same month was little changed at 49.18 cents a pound.
The contract for August delivery fell as much as 0.6 percent to 2,321 ringgit ($771) a metric ton on the Bursa Malaysia Derivatives, before ending the morning session at 2,327 ringgit in Kuala Lumpur.
The commodity may drop to 2,000 ringgit from July, Dorab Mistry, director at Godrej told Rishaad Salamat on Bloomberg Television’s “On the Move” today. That decline may come after prices gain next month on increased demand ahead of the Muslim fasting month of Ramadan, Mistry said. Purchases from the Middle East and South Asia usually climb before Ramadan, which starts in July this year, when communal meals boost total consumption.
“It doesn’t bode well for inventory levels,” said Arhnue Tan, an analyst with Alliance Investment Bank Bhd. “There’s a risk for it rising again, especially if production continues to trend upwards,” she said, referring to Malaysia’s stockpiles that dropped 11 percent to 1.93 million tons last month.
Shipments from the second-largest producer fell 9.4 percent to 799,405 tons in first 20 days of May from a month ago, according to Intertek. The expected surge in exports before Ramadan “doesn’t seem to be kicking in yet,” Tan said.
Refined palm oil for September delivery fell 0.5 percent to 6,014 yuan ($981) a ton on the Dalian Commodity Exchange, while soybean oil dropped 0.6 percent to 7,438 yuan. On the Chicago Board of Trade, soybeans for July delivery rose 0.2 percent to $14.67 a bushel and soybean oil for the same month was little changed at 49.18 cents a pound.