LOW DEMAND: Palm oil drops to one-week low concern that the advancing soybean harvest in Brazil will boost global oilseed supplies.
Palm declined for a second day, falling to the lowest level in more than a week, on concern that the advancing soybean harvest in Brazil will boost global oilseed supplies, depressing demand for the tropical oil.
The contract for May delivery lost as much as 1.5 per cent to RM2,375 (US$765) a metric tonne on the Malaysia Derivatives Exchange, the lowest most-active price since March 4, and traded at RM2,390 before the midday break. Futures have lost 29 per cent in the past year as supplies outpaced demand.
About 48 per cent of Brazil’s soybean crop was harvested as of March 8, compared with 46 per cent a year earlier, according to researcher Safras & Mercado.
The country is set to overtake the US this year as the top exporter of the beans that can be crushed to make soybean oil.
“Supplies will be ample in the market for both soybeans and palm oil from May onwards,” Chandran Sinnasamy, head of trading at LT International Futures (M) Sdn Bhd, said by phone from Kuala Lumpur. ‘High stock levels in China’ were also a concern.
Stockpiles of imported palm oil at ports tracked by Grain.gov.cn climbed to a record 1.28 million tonnes, up 70,000 tonnes from a week earlier, the state-owned researcher said March 8.
Exports from Malaysia, the second-largest producer, fell 14 per cent to 1.4 million tonnes in February for a fourth monthly drop, according to the nation’s palm oil board.
About 10.5 million tonnes of soybeans and products made from the oilseed were scheduled for shipment on vessels berthed, arriving or expected at major ports in Brazil as of March 12, up from 10.27 million tonnes a week earlier, SA Commodities and Unimar Agenciamentos Maritimos said yesterday.
Soybean oil for May delivery declined 0.4 per cent to 49.76 cents a pound on the Chicago Board of Trade.
Soybeans for May delivery saw little changed at US$14.6675 a bushel. Soybean oil was about 1.42 times costlier than palm oil.
Refined palm oil for delivery in September dropped as much as 2.1 per cent to 6,374 yuan (US$1,025) a tonne on the Dalian Commodity Exchange, the lowest price for the most-active contract since July 2010. Soybean oil for delivery in the same month declined one per cent to 8,074 yuan a tonne. —Bloomberg