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By Ranjeetha Pakiam
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Palm oil dropped for a second day on speculation that declining exports and rising output may boost stockpiles in Malaysia, the world’s second-largest producer.
The contract for July delivery declined as much as 0.6 percent to 2,296 ringgit ($768) a metric ton on the Bursa Malaysia Derivatives, before ending the morning trading session at 2,300 ringgit in Kuala Lumpur.
Inventories fell 11 percent to 1.93 million tons in April, the lowest level since June and compared with a record 2.63 million tons in December, the Malaysian Palm Oil Board said May 10. Output rose 3.1 percent to 1.37 million tons, while exports dropped 5.6 percent to 1.45 million tons, the board said. In the first 10 days of this month, shipments plunged 17 percent to 380,047 tons, according to surveyor Intertek.
“Potentially exports are going to continue to decline until the last quarter and production is going to increase as well,” said Benny Lee, chief market strategist at Jupiter Securities Sdn. “Looking forward at these prospects, we don’t really see that inventories can reduce that much anymore.”
Stockpiles at major ports in China, the second-biggest importer after India, climbed last week to a record 1.35 million tons, up about 50,000 tons from a week earlier, the China National Grain and Oils Information Center said yesterday.
“China has fully stocked itself, so maybe in the next two months, production will trend ahead of exports,” said Arhnue Tan, an analyst with Alliance Investment Bank Bhd.
Refined palm oil for September delivery dropped 0.2 percent to 6,106 yuan ($994) a ton on theDalian Commodity Exchange, while soybean oil was little changed at 7,492 yuan. On the Chicago Board of Trade, soybeans for July delivery rose 0.2 percent to $14.22 a bushel and soybean oil was little changed at 49.60 cents a pound.
To contact the reporter on this story: Ranjeetha Pakiam in Kuala Lumpur atrpakiam@bloomberg.net
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