Palm Oil Continues Losing Run
Palm oil in Malaysia yesterday dropped for a third day, headed for the longest losing run in two months, as investors deemed recent gains excessive amid concern demand may wane in the global recession.
The vegetable oil also tracked declines in crude oil and soybeans as a drop in equities raised concern that the global economy may not recover anytime soon. Palm oil prices had surged 46 per cent in the 11 weeks through May 8.
“Investors are worried prices went up too much too fast,” said Ying Haoliang, a Shanghai-based analyst at Orient Securities Futures Co. “The fall in soybean oil prices also makes crude palm oil less attractive to investors.”
Palm oil for July delivery on the Malaysia Derivatives Exchange in Kuala Lumpur fell as much as 3.8 per cent to RM2,565 a metric ton and traded at RM2,585 at 5 pm local time. Futures in Dalian slumped by the daily limit.
The MSCI Asia Pacific Index slipped as much as 2.1 per cent to 95.21 earlier. The index was at 96.75 at 5 pm in Singapore.
Crude oil futures in New York reversed earlier declines to rise 0.9 per cent to US$56.87 a barrel at 5.03 pm. Singapore time in after-hours trading. Palm oil can be used in biofuels, stretching fossil-fuel supplies.
September-delivery palm oil on the Dalian Commodity Exchange tumbled by the exchange-imposed 5 per cent daily limit to RM6,532 a ton, before closing 4.7 per cent lower at 6,554 yuan.
Soybean oil for July delivery in Chicago fell for a fourth day, dropping as much as 1.6 per cent to 37.3 cents a pound before trading at 37.74 cents at 5.05 pm in Singapore. That’s the longest slump since December.
Palm oil, a substitute for soybean oil, is now 14 per cent cheaper than its rival, compared with 51 per cent at the start of the year, according to Bloomberg data.
September-delivery soybean oil in Dalian, the most-active contract, also slumped the 5 per cent limit to 7,274 yuan a ton, before closing at 7,326 yuan.