Palm oil declines on speculation
Wednesday, 12 May 2010
KUALA LUMPUR, May 11 (Bloomberg): Palm oil futures declined on speculation demand is easing as cheaper soybean oil prices prompt buyers to switch.
July-delivery palm oil dropped as much as 1 per cent to 2,505 ringgit ($781) a metric ton on the Malaysia Derivatives Exchange, and traded at 2,510 ringgit at the 12:30 p.m. trading break in Kuala Lumpur. Exports fell to 1.28 million tons last month from a revised 1.4 million tons in March, the Malaysian Palm Oil Board said yesterday.
The decline in exports "could be due to some demand rebalancing happening, since the discount between crude palm oil and soy oil has narrowed," said Hoe Lee Leng, an analyst at RHB Research Institute Sdn. "Price-sensitive markets like India" may be switching to soy, he said.
Soybeans are crushed to make meal for animal feed, leaving oil for cooking. The price of the oil, the main substitute for palm products, declined the past month after the South American crop was harvested.
Soybean oil for July delivery fell for a second day in Chicago to 38.32 cents a pound. Its premium over palm oil was last at $61.83 a ton after plunging 26 per cent yesterday, according to Bloomberg data.
Palm oil may trade between 2,300 ringgit and 2,700 ringgit in the second quarter "as the upside will be capped by the bumper soybean harvest in South America," said Ivy Ng, a plantation analyst at CIMB Investment Bank Bhd. Palm oil exports from Malaysia to India have dropped 25 per cent for the first four months of the year, she said.
July-delivery palm oil dropped as much as 1 per cent to 2,505 ringgit ($781) a metric ton on the Malaysia Derivatives Exchange, and traded at 2,510 ringgit at the 12:30 p.m. trading break in Kuala Lumpur. Exports fell to 1.28 million tons last month from a revised 1.4 million tons in March, the Malaysian Palm Oil Board said yesterday.
The decline in exports "could be due to some demand rebalancing happening, since the discount between crude palm oil and soy oil has narrowed," said Hoe Lee Leng, an analyst at RHB Research Institute Sdn. "Price-sensitive markets like India" may be switching to soy, he said.
Soybeans are crushed to make meal for animal feed, leaving oil for cooking. The price of the oil, the main substitute for palm products, declined the past month after the South American crop was harvested.
Soybean oil for July delivery fell for a second day in Chicago to 38.32 cents a pound. Its premium over palm oil was last at $61.83 a ton after plunging 26 per cent yesterday, according to Bloomberg data.
Palm oil may trade between 2,300 ringgit and 2,700 ringgit in the second quarter "as the upside will be capped by the bumper soybean harvest in South America," said Ivy Ng, a plantation analyst at CIMB Investment Bank Bhd. Palm oil exports from Malaysia to India have dropped 25 per cent for the first four months of the year, she said.