20/07/2010 (Bloomberg) - Palm oil futures fell for the first time in nine days after data showed exports from Malaysia, the second-biggest grower, dropped.

October-delivery futures shed 1.2 percent to 2,424 ringgit ($754) a metric ton on the Malaysia Derivatives Exchange.

“The market is weak because of lower export numbers from Malaysia,” said Ryan Long, a trader at OSK Investment Bank Sdn.

Shipments typically increase in the third quarter because of festivals in China, India, Pakistan and Indonesia, Asia’s most-populous nations, when communal meals raise demand for cooking oils. In June, exports from Malaysia beat estimates by cargo surveyors Intertek and Societe Generale de Surveillance.

Overseas sales dropped three percent to 879,018 tons in the first 20 days of the month, from the same period in June, according to Intertek. Shipments to China slumped 61 percent to 134,700 tons, the data showed. Rival SGS said exports fell 4.8 percent, with shipments to China down 61 percent and those to India lower by 7.6 percent.

IOI Corp., Malaysia’s second-biggest producer, sees heavy rainfall from the La Nina weather phenomenon affecting palm oil output in Southeast Asia as this may disrupt harvesting, Reuters reported, citing Chairman Lee Shin Cheng.

The company expects prices to rise if output is affected and didn’t give a forecast, according to the report.

“The market looks firm in the short term because of fears of weather conditions threatening the crop,” OSK’s Long said.

La Nina causes wetter-than-normal conditions in Asia and drier weather in the Americas.

‘Too Early’
Still, “it is too early to conclude whether rainfall would be heavy enough to affect harvesting,” said AmResearch Sdn. in a report. “A few plantation companies under our coverage are still targeting fresh fruit bunch output growth of 5 percent to 10 percent this year. We reckon that the surge in crude palm oil prices recently was underpinned by rising soybean prices and not by the possibility of La Nina affecting palm oil output.”

The most-active contract has advanced 9.1 percent in eight days before today on speculation that demand for the vegetable oil will climb on Asian demand.

The “huge supply of soybeans from South America is expected to cap upside to crude palm oil prices,” it said.

Soybeans in Chicago, which gained 8.7 percent in the two weeks ended July 16 to $9.85 a bushel, was at $9.745 a bushel at 5:19 p.m. Singapore time. December-delivery soybean oil rose for the first time in three days, gaining 0.1 percent to 38.78 cents a pound at 5:16 p.m.

CME Group Inc.’s October-delivery palm oil contract, which is pegged to the Malaysian benchmark price, fell 0.3 percent to $755.5 a ton yesterday.

On the Dalian Commodity Exchange, January-delivery palm oil fell 0.2 percent to 6,526 yuan ($963) a ton. Dalian soybean oil dropped 0.1 percent to 7,554 yuan.