BS: Palm Oil Has First Weekly Loss in Three on Crude, Debt Crisis
By Luzi Ann Javier
May 7 (Bloomberg) -- Palm oil futures declined, posting its first weekly loss in three weeks, as Europe’s debt crisis curbed investors’ risk appetite and on concern that the recent drop in crude oil prices may reduce demand for biodiesel.
July-delivery palm oil fell as much as 1.6 percent to 2,484 ringgit ($759) a metric ton on the Malaysia Derivatives Exchange before closing at 2,519 at 6 p.m. local time. The contract lost 1.5 percent of its value this week.
U.S. stocks yesterday tumbled the most in a year, briefly erasing $1 trillion in market value, and the Reuters/Jefferies CRB Index of 19 raw materials slumped to a three-month low on concern that Europe’s debt crisis will spread. Crude gained 1 percent to $77.92 a barrel after plunging 10 percent this week through yesterday, poised for the biggest weekly loss since July.
“There’s that concern in Europe” that’s weighing on all commodities including palm oil, Amol Tilak, an analyst at Kotak Commodity Services Ltd., said by phone from Mumbai. Crude oil’s decline to $77 “eroded the appeal of palm oil as an alternative fuel. Demand has taken a beating,” he said.
Soybean oil, a substitute for palm oil, for July delivery fell as much as 0.6 percent to 37.9 cents a pound in Chicago.
Sime Darby Bhd., the biggest palm oil producer, fell for a fourth straight day, taking this week’s losses to 2.4 percent, the biggest such decline since Jan. 29.
Still, palm oil prices may find support in China’s strong demand for vegetable oils, Tilak said. “China may actually be importing more” palm oil on concern delays in soybean planting may curb domestic vegetable oil supplies, he said.
China’s Heilongjiang province will reduce soybean planting this year and increase corn and rice sowing, the China National Grain & Oils Information Center said in an e-mailed statement today. Heilongjiang is the biggest soybean growing province in the world’s largest importer of the oilseed.
Soybean planting in Heilongjiang may be delayed by more than 10 days because of bad weather, the state-owned market information provider said. The delay and decline in China’s planting may pare the volume and quality of soybeans, supporting prices, the center said.
--With assistance from Pratik Parija in New Delhi. Editors: Matthew Oakley, Ravil Shirodkar
To contact the reporter on this story: Luzi Ann Javier in Singapore at +65-6212-1304, ljavier@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
