Palm Oil Declines for Fifth Day

Palm oil dropped for the fifth day on concerns that a decline in exports

from Malaysia may boost stockpiles of cooking oil in the world’s

second-biggest producer.

The most-active June-delivery contract fell 0.3 per cent to RM3,261

(US$1,079) a metric ton, the lowest price since Nov. 24. Futures slumped

5.4 per cent this week.

“Palm oil has become a very costly oil and that has killed demand,”

Sandeep Bajoria, chief executive officer at Sunwin Group, said in a

phone interview from Mumbai. Futures “went down because the palm oil

stocks are rising and they needed to generate demand.”

Palm oil has dropped 18 per cent from the 35-month high of 3,967

ringgit a ton on Feb 10 on speculation that output from Indonesia and

Malaysia, the

two largest

producers, may increase this year as weather conditions improve.

Production may climb this month and stockpiles at the end of this month

will be higher than in February, Bajoria said.

Output and stockpiles in Malaysia gained in February from the previous

month as adverse weather conditions eased and exports dropped to the

lowest in three years, according to the nation’s Palm Oil Board.

Inventories of the edible oil climbed 4.2 per cent to 1.48 million tons

in February, while shipments fell 8.5 per cent to 1.11 million tons, the

lowest level since February 2008, it said on March 10.

Malaysia’s palm-oil exports declined 3.7 per cent in the first 25

days of March to 937,591 tons from 973,441 tons in the same period last

month, independent market surveyor Intertek said today. Shipments

dropped 0.3 per cent in the same period, rival Societe Generale de

Surveillance said.

‘Weak Exports’

“Risks are to the bearish side because production seems to be

recovering both in Indonesia and Malaysia whereas exports have been

fairly weak,” said Sunaina Dhanuka, an analyst with Macquarie Capital

Securities (Malaysia) Sdn Bhd.

“That means you’re probably going to see inventories rise sooner than what the market had expected.”

Soybeans for May delivery climbed 0.6 per cent to US$13.625 a bushel

on the Chicago Board of Trade at 6:41 p.m. Singapore time. Soybean oil

for delivery in the same month gained as much as 0.6 per cent to 56.48

cents a pound.

September-delivery palm oil on the Dalian Commodity Exchange rose

1.5 per cent to close at 9,110 yuan (US$1,389) a ton. CME Group Inc’s

most-active June palm-oil contract, pegged to the Malaysian benchmark

price, slumped as much as 4.4 per cent to US$1,077.50 a ton.

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