BLBG:Palm Oil Extends Drop as China Builds Record Holdings at Ports
Palm oil dropped to the lowest level in more than two weeks on signs that buyers in China built up the biggest-ever stockpiles before the largest cooking oil consumer tightened rules on edible oil imports.
The contract for March delivery fell as much as 1 percent to 2,394 ringgit ($788) a metric ton on the Malaysia Derivatives Exchange, the lowest price for the most-active contract since Dec. 21, and was at 2,405 ringgit at 12:27 p.m. in Kuala Lumpur. Today’s drop was the fourth straight day of losses.
With effect on Jan. 1, China imposed more stringent rules on edible oil imports to improve food-safety standards. Palm oil inventory at major ports in China climbed to a record 1.1 million tons as of yesterday, the official China National Grain & Oils Information Center said in a report today. Malaysia’s palm oil reserves reached an all-time high in November, and official data on holdings in December are due Jan. 10.
“Demand from China may be lower in January,” Benny Lee, market strategist at Jupiter Securities Sdn., said by phone in Kuala Lumpur. As total sales have also slowed, inventories in Malaysia may expand further, said Lee.
Stockpiles in Malaysia were 2.53 million tons in December compared to the record 2.56 million tons a month earlier, according to the median of estimates from six analysts and two plantation companies in a Bloomberg survey published yesterday.
China’s imports from Malaysia jumped 24 percent to 866,340 tons in November and December last year from 698,000 tons in the same period in 2011, according to data from Societe Generale de Surveillance, or SGS. Total shipments from Malaysia fell 7.9 percent to 1.52 million tons in December, SGS said on Dec. 31. SGS and Intertek are scheduled to give estimates for shipments from Malaysia for the first 10 days of January on Jan. 10.
Palm oil for May delivery lost 1.3 percent to 6,874 yuan ($1,104) a ton on the Dalian Commodity Exchange. Soybean oil for May was little changed at 8,686 yuan a ton.
Soybeans for March delivery fell 0.2 percent to $13.86 a bushel on the Chicago Board of Trade. Soybean oil for delivery in March climbed 0.2 percent to 50.07 cents a pound.
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
