BLBG: Palm Oil Drops to Lowest in More Than Seven Months as Crude Extends Losses
Palm oil futures declined to the lowest level in more than seven months as crude oil fell for a sixth day, cooling demand for the commodity used in bio-diesel.
The September-delivery contract lost as much as 0.6 percent to 2,277 ringgit ($724) a metric ton, the lowest since Nov. 13, on the Malaysia Derivatives Exchange. Futures paused at 2,287 ringgit at the 12:30 p.m. local time break.
Crude oil for August delivery fell as much as 1.5 percent to $71.09 a barrel on concern the pace of economic recovery is slowing in Europe and China, stalling a rebound in fuel demand. Crude traded in New York has declined 9.5 percent this year.
The “2,300 ringgit level was a psychological support and it was broken easily,” said Ryan Long, a futures trader at OSK Investment Bank Bhd. “The shorts will now look for cues from all directions to take profit,” he said, referring to bets that prices will fall.
The market will take its cues from data on output, exports and stockpiles to be released by the Malaysian Palm Oil Board, usually on the 10th of each month or the next working day.
June palm oil exports from Malaysia climbed 1.5 percent to 1.35 million tons, Intertek said on June 30. Shipments to China jumped 22 percent to 400,200 tons from May, the surveyor said. Rival firm Societe Generale de Surveillance estimated overseas sales rose 1.2 percent last month to 1.34 million tons, with shipments to China climbed 4.5 percent to 354,700 tons.
China is the largest consumer of edible oils.
Soybean Prices
Soybean futures for November delivery fell as much as 0.7 percent to below $9 a bushel on the Chicago Board of Trade, and were at $9.035 at 12:17 p.m. Singapore time. Palm and soybean oils are direct substitutes.
“We expect a downside bias in the coming months” for the oilseed, Rabobank Agri Commodity Markets Research said in its monthly report yesterday.
CME Group Inc.’s September-delivery palm oil contract, pegged to the Malaysian benchmark price, lost 0.4 percent to $720 a ton.
On the Dalian Commodity Exchange, January-delivery palm oil declined as much as 1.7 percent to 6,152 yuan ($908) a ton, the lowest since Nov. 6, before pausing at 6,188 yuan at the 11:30 a.m. break. Soybean oil lost 0.7 percent to 7,290 yuan a ton.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
