Palm Drops as Lower Exports Seen Slowing Decrease in Reserves

By Ranjeetha Pakiam 

Palm oil fell to the lowest level in four months on speculation that a decline in shipments fromMalaysia, the second-largest producer, will slow the pace of decline in the country’s stockpiles.

The contract for July delivery lost as much as 1.4 percent to 2,263 ringgit ($744) a metric ton on the Bursa Malaysia Derivatives, the lowest price for most-active futures since Dec. 14, before trading at 2,280 ringgit at 12:17 p.m. in Kuala Lumpur. Futures dropped 2.1 percent last week for a fourth weekly decline, the longest losing streak since the four weeks ended Dec. 14.

Exports fell 4.9 percent to 882,469 tons in the first 20 days of April from a month earlier, surveyor Intertek said April 20. Reserves dropped to a seven-month low of 2.17 million tons in March as shipments gained for the first time in five months, according to the Malaysian Palm OilBoard. Futures lost 23 percent in 2012 as stockpiles rose to a record.

“The expectation was that if palm oil exports can stay flat month-on-month, then there’s a chance that inventories can get below 2 million tons” in April, Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd., said by phone today. It now looks like they may stay above the 2 million level, he said.

Soybean oil for July delivery fell 0.8 percent to 48.79 cents a pound on the Chicago Board of Trade and soybeans dropped 0.7 percent to $13.7275 a bushel.

Refined palm oil for September delivery declined as much as 2.1 percent to 5,994 yuan ($970) a ton on the Dalian Commodity Exchange, the lowest level for the most-active contract since November 2009, while soybean oil fell as much as 1.9 percent to 7,474 yuan a ton, the lowest since July 2010.

To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur atrpakiam@bloomberg.net

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