MARKET DEVELOPMENT
Palm Drops to Two-Week Low as Rain Forecast Eases Drought Woes
Palm Drops to Two-Week Low as Rain Forecast Eases Drought Woes
14/03/2014 (Bloomberg) - Palm oil declined, heading for the first weekly loss in six, as a forecast for rain in Malaysia eased concern that a dry spell will hurt crops in the world’s largest producer after Indonesia.
The contract for May delivery fell as much as 1.4 percent to 2,769 ringgit ($844) a metric ton on Bursa Malaysia Derivatives, the lowest for futures since Feb. 28. Prices were at 2,788 ringgit by 4:53 p.m. in Kuala Lumpur, dropping 3.4 percent this week, the biggest weekly drop since Jan. 10.
Some isolated rain may be expected at the end of this week and early next week as the moisture levels in the atmosphere have gradually increased in the past few days, the Malaysian Meteorological Department said in an e-mail today. The start of the inter monsoon season, which usually begins around March 20 or 21, will bring more widespread rainfall with thunderstorms over Peninsular Malaysia, particularly in the afternoons and early evenings, the department said.
“There are weather forecasts for this weekend saying that rain is coming in, so that has prompted some profit-taking,” Donny Khor, deputy director of futures and commodities at RHB Investment Bank Bhd., said by phone from Kuala Lumpur. “Production is still in the downward cycle, but there may be some recovery in March.”
Output in Malaysia dropped last month to the lowest since April 2012 because of lagged effects of a drought in mid-2013. A dry spell currently sweeping most of Southeast Asia threatens to hurt palm oil production later this year.
Fruit Yields
Rains forecast in a week’s time won’t neutralize a temporary drop in fresh fruit bunch yields due to the drought, which is expected to curb crude palm oil production in four-to-six months’ time, Hariyanto Wijaya, an analyst at PT Mandiri Sekuritas, said today.
Imports by India, the world’s biggest buyer, slumped 50 percent in February to 393,828 metric tons, the lowest in three years, the Mumbai-based Solvent Extractors’ Association of India said in an e-mailed statement today.
Soybean oil for delivery in May fell 0.9 percent to 42.60 cents a pound on the Chicago Board of Trade, while soybeans lost 0.6 percent to $13.885 a bushel.
Refined palm oil for September delivery fell 2.1 percent to close at 6,274 yuan ($1,020) a ton on the Dalian Commodity Exchange. Soybean oil dropped 1.5 percent to end at 7,052 yuan.
The contract for May delivery fell as much as 1.4 percent to 2,769 ringgit ($844) a metric ton on Bursa Malaysia Derivatives, the lowest for futures since Feb. 28. Prices were at 2,788 ringgit by 4:53 p.m. in Kuala Lumpur, dropping 3.4 percent this week, the biggest weekly drop since Jan. 10.
Some isolated rain may be expected at the end of this week and early next week as the moisture levels in the atmosphere have gradually increased in the past few days, the Malaysian Meteorological Department said in an e-mail today. The start of the inter monsoon season, which usually begins around March 20 or 21, will bring more widespread rainfall with thunderstorms over Peninsular Malaysia, particularly in the afternoons and early evenings, the department said.
“There are weather forecasts for this weekend saying that rain is coming in, so that has prompted some profit-taking,” Donny Khor, deputy director of futures and commodities at RHB Investment Bank Bhd., said by phone from Kuala Lumpur. “Production is still in the downward cycle, but there may be some recovery in March.”
Output in Malaysia dropped last month to the lowest since April 2012 because of lagged effects of a drought in mid-2013. A dry spell currently sweeping most of Southeast Asia threatens to hurt palm oil production later this year.
Fruit Yields
Rains forecast in a week’s time won’t neutralize a temporary drop in fresh fruit bunch yields due to the drought, which is expected to curb crude palm oil production in four-to-six months’ time, Hariyanto Wijaya, an analyst at PT Mandiri Sekuritas, said today.
Imports by India, the world’s biggest buyer, slumped 50 percent in February to 393,828 metric tons, the lowest in three years, the Mumbai-based Solvent Extractors’ Association of India said in an e-mailed statement today.
Soybean oil for delivery in May fell 0.9 percent to 42.60 cents a pound on the Chicago Board of Trade, while soybeans lost 0.6 percent to $13.885 a bushel.
Refined palm oil for September delivery fell 2.1 percent to close at 6,274 yuan ($1,020) a ton on the Dalian Commodity Exchange. Soybean oil dropped 1.5 percent to end at 7,052 yuan.