MARKET DEVELOPMENT
Palm Oil Nears Lowest Level Since October 2009 as Output Expands
Palm Oil Nears Lowest Level Since October 2009 as Output Expands
30/07/2013 (Bloomberg) - Palm oil traded near the lowest level in almost four years on forecasts for record global supplies of cooking oils.
The contract for delivery in October dropped as much as 1.4 percent to 2,137 ringgit ($661) a metric ton on the Bursa Malaysia Derivatives, matching the intraday low on July 26, the cheapest price since October 2009. Futures ended the morning session little changed at 2,170 ringgit, set for a 7.4 percent loss this month, the most since September.
Palm production, accounting for 35 percent of cooking oil supply, will expand 5 percent to 58.1 million tons, U.S. Department of Agriculture data show. Soybean oil, a competing product, slumped yesterday to the lowest since 2010 as supplies of the second most-consumed edible variety will rise to a record for a fifth year and reach 44.6 million tons, the USDA predicts.
“The decline in soybean oil prices is quite steep because of the bumper harvest,” said Benny Lee, a market strategist at Jupiter Securities Sdn. in Kuala Lumpur. “The weaker ringgit should make palm oil a bit more attractive against soybean oil prices, but because demand is actually lower than expected, I don’t think it will actually help lift palm oil prices a lot.”
Prices may drop to as low as 1,900 ringgit this quarter before rebounding by the end of the year, said Lee. The ringgit fell to a three-year low on concern investors will repatriate funds after $2.9 billion of sovereign debt matures tomorrow.
Soybean oil for delivery in December was little changed at 42.84 cents a pound on the Chicago Board of Trade after declining to the lowest level since September 2010 yesterday. Soybeans for delivery in November declined 0.4 percent to $12.155 a bushel.
Refined palm oil for January delivery dropped as much as 0.9 percent to 5,306 yuan ($865) a ton on the Dalian Commodity Exchange, the lowest level for the most-active contract since March 2009. Soybean oil fell as much as 1.3 percent to 6,902 yuan, the lowest level since October 2009.
The contract for delivery in October dropped as much as 1.4 percent to 2,137 ringgit ($661) a metric ton on the Bursa Malaysia Derivatives, matching the intraday low on July 26, the cheapest price since October 2009. Futures ended the morning session little changed at 2,170 ringgit, set for a 7.4 percent loss this month, the most since September.
Palm production, accounting for 35 percent of cooking oil supply, will expand 5 percent to 58.1 million tons, U.S. Department of Agriculture data show. Soybean oil, a competing product, slumped yesterday to the lowest since 2010 as supplies of the second most-consumed edible variety will rise to a record for a fifth year and reach 44.6 million tons, the USDA predicts.
“The decline in soybean oil prices is quite steep because of the bumper harvest,” said Benny Lee, a market strategist at Jupiter Securities Sdn. in Kuala Lumpur. “The weaker ringgit should make palm oil a bit more attractive against soybean oil prices, but because demand is actually lower than expected, I don’t think it will actually help lift palm oil prices a lot.”
Prices may drop to as low as 1,900 ringgit this quarter before rebounding by the end of the year, said Lee. The ringgit fell to a three-year low on concern investors will repatriate funds after $2.9 billion of sovereign debt matures tomorrow.
Soybean oil for delivery in December was little changed at 42.84 cents a pound on the Chicago Board of Trade after declining to the lowest level since September 2010 yesterday. Soybeans for delivery in November declined 0.4 percent to $12.155 a bushel.
Refined palm oil for January delivery dropped as much as 0.9 percent to 5,306 yuan ($865) a ton on the Dalian Commodity Exchange, the lowest level for the most-active contract since March 2009. Soybean oil fell as much as 1.3 percent to 6,902 yuan, the lowest level since October 2009.