Palm oil dropped on speculation that stockpiles in Malaysia will hold near a record as an export tax curbs demand and on concern that a levy on Cyprus’s bank deposits may throw Europe back into crisis.
The contract for May delivery, with the most open interest, declined as much as 0.8 per cent to RM2,395 (US$765) a metric tonne on the Malaysia Derivatives Exchange, and ended the morning session at RM2,399 in Kuala Lumpur. The June contract, with the highest volume, fell 0.7 per cent to RM2,399.
Commodities measured by the Standard & Poor’s GSCI Index fell as much as one per cent yesterday after Euro finance ministers agreed to force depositors in Cypriot banks to share the cost of a bailout. While Cyprus accounts for less than half a per cent of the euro economy, the concern is that the one-time tax may trigger bank runs across Europe.
“Prices are likely to show weakness on Cyprus fears,” Ker Chung Yang, an analyst at Phillip Futures Pte, said yesterday by phone from Singapore. “Crude palm oil prices are likely to track the overall market at least for this coming week.”
Malaysia’s exports may be unchanged in March after the government retained a 4.5 per cent tax for a second month in April, Ker said.
Shipments fell 14 per cent to 1.4 million tonnes in February, according to the Malaysian Palm Oil Board. While inventories dropped to 2.44 million tonnes, they were near an all-time high of 2.63 million tonnes reached in December.
Soybean oil for May delivery lost 0.7 per cent to 49.58 cents a pound on the Chicago Board of Trade, while soybeans declined 0.9 per cent to US$14.1275 a bushel. Refined palm oil for September fell 1 percent to 6,300 yuan (US$1,013) a tonne on the Dalian Commodity Exchange. Soybean oil retreated one per cent to 8,054 yuan a ton. — Bloomberg