Palm Drops on Lower Crude, Europe Debt

Palm oil futures declined, set for the biggest 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 per cent to

RM2,484
a metric ton on the Malaysia Derivatives Exchange and

traded at 2,499 at the 12.30 pm trading break. The contract has dropped

2.3 per cent this week.

US stocks yesterday tumbled the most in a

year, briefly erasing US$1 trillion in market value, and the

Reuters/Jefferies CRB Index of 19 commodities slumped to a three-month

low on concern that Europe’s debt crisis will spread.

Crude oil

gained 0.5 per cent to US$77.49 a barrel after plunging 10 per cent this

week through yesterday, poised for the biggest weekly loss since July

2009.


“There’s that concern in Europe” that’s weighing on all commodities

including palm oil, Amol Tilak, an analyst at Mumbai-based Kotak

Commodity Services Ltd, said by phone today.

Crude oil’s decline

to US$77 “eroded the appeal of palm oil as an alternative fuel. Demand

has taken a beating,” he said.

Sime Darby Bhd, the world’s

biggest palm oil producer, fell for a fourth straight day, taking this

week’s losses to 2.4 per cent, the biggest such drop since January 29.

IOI Corp., Malaysia’s second-biggest producer, also declined. –

Bloomberg

Source : Business Times

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