BS: Palm Oil Declines as Brazil Increases Soybean Crop Forecast
By Claire Leow
June 9 (Bloomberg) -- Palm oil futures dropped for a third day after Brazil, the world’s second-largest producer of rival soybeans, raised its crop forecast.
Palm oil for August delivery fell as much as 1.2 percent to 2,402 ringgit ($722) a metric ton on the Malaysia Derivatives Exchange and paused at 2,406 ringgit at the 12:30 p.m. trading break in Kuala Lumpur.
Without “any threat of supply shortage, the substitution effect with soy oil in play means we could see more days of dull prices,” said Arhnue Tan, an analyst at ECM Libra Capital Sdn.
Brazilian farmers will harvest 68.7 million tons of soybeans this year, more than the 67.9 million tons estimated on May 6, the Agriculture Ministry’s crop-forecasting agency Conab said yesterday. Production will climb from 57.2 million tons last year.
Soybeans traded in Chicago fell as much as 0.5 percent to $9.2675 a bushel and traded at $9.27 a bushel at 12:54 p.m. Singapore time.
Chicago soybean oil dropped 0.3 percent to 36.55 cents a pound, making it $81.90 a ton more expensive than palm oil, 35 percent lower than the 12-month average of $126.42, according to Bloomberg data.
Crude oil gained a second day, rising 0.4 percent to $72.28 a barrel, providing support for vegetable oils, which can be used to make biofuels. Crude dropped 14 percent in May on concern that the government debt crisis in Europe will widen.
Under the European Union’s Renewable Energy Directive, issued in June 2009, the 27 member states are obliged to meet 5.75 percent of their road-transport fuel needs using renewable energy, including biofuels, this year, rising to 10 percent by 2020. The EU is the second-largest buyer of Malaysian palm oil.
CME Group Inc.’s September-delivery palm oil contract, which is pegged to the Malaysian benchmark price, dropped a fifth day, losing 0.6 percent to $718 a ton.
On the Dalian Commodity Exchange, January-delivery palm oil slumped 1.7 percent to 6,338 yuan ($928) a ton at the 11:30 a.m. trading break. Dalian soybean oil dropped 0.6 percent to 7,402 yuan a ton.
--Editors: Matthew Oakley, Jarrett Banks.
To contact the reporter on this story: Claire Leow in Singapore at cleow@bloomberg.net
To contact the editor responsible for this story: Jim Poole at jpoole4@bloomberg.net
