PALM oil fell for a fourth day on concerns that global production may increase this month and a rally in the ringgit to the highest since August 2011 may reduce the appeal of commodities priced in the Malaysian currency.
The contract for July delivery fell as much as 0.7 per cent to RM2,235 (US$750) a metric tonne on the Bursa Malaysia Derivatives, before trading at RM2,246 in the afternoon session in Kuala Lumpur yesterday.
Futures, which lost 7.9 per cent this year, reached RM2,230 yesterday, the lowest since on December 13.
Output from Malaysia, the world’s second largest producer, gained 5.3 per cent to 1.4 million tonnes in April, while exports fell 6.5 per cent to 1.44 million tonnes, a Bloomberg survey published yesterday showed.
Reserves decreased 5.1 per cent to 2.06 million tonnes, the least since July, according to the survey. Official data was due for release on May 10.
“People are looking at the current month’s production which is anticipated to be about eight per cent to 10 per cent higher in Malaysia, and Indonesia is also expected to record higher output after a few months of lower production,” said Chandran Sinnasamy, head of trading at LT International Futures Sdn.
“That will apply pressure. There’s no robust demand at the moment to support prices.”
Production in Indonesia, the largest supplier, may reach 28 million tonnes this year from 25.7 million tonnes in 2012, Derom Bangun, chairman of the country’s palm oil board, said yesterday. That was lower than a February forecast of 30 million tonnes.
The rally in the ringgit also weighed on futures, Chandran said. The ringgit strengthened after Malaysian Prime Minister Datuk Seri Najib Tun Razak’s coalition retained power in the weekend poll, bolstering the outlook for economic reforms.
Soybeans for July delivery gained 0.5 per cent to US$13.7575 a bushel on the Chicago Board of Trade. Soybean oil climbed 0.6 per cent to 49.06 cents a pound.
Refined palm oil for September delivery declined 0.7 per cent to close at 5,904 yuan (US$960) a tonne on the Dalian Commodity Exchange. Soybean oil for same month delivery retreated 0.2 per cent to end at 7,362 yuan a tonne. — Bloomberg