BLBG:Palm Oil Slumps to Three-Year Low as Stockpiles Climb to Record
Palm oil dropped to the lowest level in three years as Malaysian stockpiles expanded to a record and as the U.S. raised its soybean crop estimate, easing concerns that global cooking oil supply will decline.
The contract for January delivery fell as much as 4.2 percent to 2,220 ringgit ($725) a metric ton on the Malaysia Derivatives Exchange, the lowest price for the most-active contract since November 2009. Futures were at 2,242 ringgit at the midday break in Kuala Lumpur, extending last week’s retreat of 7.2 percent, the most since the five days ended Sept. 28.
Reserves in Malaysia, the largest producer after Indonesia, climbed 1.1 percent to 2.51 million tons in October from 2.48 million tons in September, according to the Malaysian Palm Oil Board. That compared with an estimated 2.7 million tons in a Bloomberg survey. Output fell 3.3 percent to 1.94 million tons from a monthly record of 2 million tons in September, board said. Exports surged 16 percent to 1.76 million tons.
“There are more outflows” of palm oil, said Ben Santoso, an analyst at DBS Group Holdings Ltd. in Singapore. “Given that November, December output should drop, we think that prices have pretty much bottomed out already.”
The U.S. soybean harvest will total 2.971 billion bushels (80.86 million tons), up 3.9 percent from 2.86 billion estimated in October, the U.S. Department of Agriculture said Nov. 9 in its fourth survey-based forecast for this year’s crop. The average estimate of 29 analysts surveyed by Bloomberg was 2.892 billion bushels, and U.S. farmers harvested 3.094 billion bushels last year. Soybeans are crushed to make oil which competes with palm for use in food and fuel.
Limit Decline
“The USDA data is negative to CPO prices as higher soybean oil supply will curb demand,” Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd., wrote in a report today, referring to crude palm oil by its initials.
Soybean oil for December delivery slid as much as 2.6 percent to 46.52 cents a pound on the Chicago Board of Trade, the lowest level for the most-active contract since October 2010. Soybeans for January declined as much as 1.9 percent to $14.235 a bushel, the cheapest price for the most active contract since June, before trading at $14.245.
Palm oil for May delivery lost as much as 4 percent to 6,482 yuan ($1,041) a ton from the previous settlement on the Dalian Commodity Exchange, the maximum daily move, and the lowest level for the most active contract since July 2010. Futures last traded at 6,554 yuan.
Soybean oil for the same month fell as much as 4 percent to 8,344 yuan a ton from the previous settlement, also the daily limit, and the lowest price since September 2010. Futures last traded at 8,378 yuan.
To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur at rpakiam@bloomberg.net
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
