Palm oil futures fell in Malaysia, set for a weekly drop, as buyers hold off purchases on speculation supply will rise this quarter, damping prices.
“We’re hitting the peak of production season,” Ivy Ng, a plantation analyst at CIMB Investment Bank Bhd said by phone from Kuala Lumpur today. “There’s no rush to buy now.” Third- quarter output is typically the highest every year, she said.
Palm oil for September delivery dropped as much as 2.4 per cent to RM2,123 (US$602) a metric ton on the Malaysia Derivatives Exchange. The most active contract was at RM2,146 at 11:30 am local time, taking the week’s loss to 7.5 per cent. Palm oil prices have gained 26 per cent this year, on optimism of higher demand.
Indonesia, the world’s largest palm oil producer, sold half of the 18,000 tons of the tropical oil offered at auctions yesterday. Output is forecast to rise 8 per cent to 23.2 million tons next year, from an estimated 21.5 million tons this year, as growers expand planting to take advantage of prices, Achmad Manggabarani, director general for plantations at the agriculture ministry, said June 30.
Prices also fell after unemployment in the US and Europe rose higher than expected, raising concern a global economic recovery may stall, hurting demand for commodities including palm oil, CIMB’s Ng said.
Employers in the US cut 467,000 jobs in June, compared with the 365,000 jobs median forecast of 79 economists surveyed by Bloomberg News. The jobless rate rose to 9.5 per cent, the highest since Aug. 1983, according to figures released by the Labor Department yesterday.
Unemployment in the 16-member euro region rose 9.5 per cent in May, the highest in a decade, exceeding the 9.4 per cent forecast of 29 economists surveyed by Bloomberg.
“We need an economic recovery for demand to improve,” Ng said. Lower prices of rival soybean oil also helped pull prices lower, she said. Palm oil and soybean oil can be refined into cooking oil, or processed to make biofuels. – Bloomberg.
Source : Business Times