Palm oil dropped to the lowest level in four weeks as global production of palm and soybeans is set to climb this year on increased acreage.
The contract for May delivery fell as much as 0.9 percent to 2,448 ringgit ($789) a metric ton on the Malaysia Derivatives Exchange, the lowest price for the most active month since Jan. 29, before trading at 2,451 ringgit by the end of the morning session. Futures declined for a fifth day.
Palm oil will probably decline this year after Asian producers boosted acreage and global oilseed supplies rose, said Dorab Mistry, a Godrej International Ltd. director who has traded the commodity for more than 30 years. The expansion of estates will increase output, while bad weather that disrupted soybean supplies in 2012 will prompt farmers to ramp up harvests, said Mistry. Soybean oil also fell for a fifth day.
“Mistry’s comments would have contributed to additional bearish sentiment,” Arhnue Tan, an analyst at Alliance Investment Bank Bhd., said in Kuala Lumpur. “Production numbers haven’t dropped off very significantly, so there’s not a lot of confidence inventories would drop significantly.”
Stockpiles in Malaysia held near a record in January, the palm oil board said. While production fell 10 percent, it was still 24 percent higher than the same month last year.
World soybean harvests will reach a record 278 million tons in 2013, Aaron Brown, an oilseed merchandiser and trader for Alfred C. Toepfer Ltd., said yesterday. U.S. farmers will expand sowing, taking the harvest to an all-time high of 3.4 billion bushels, and doubling inventories by Aug. 31, 2014 to 250 million bushels, the Department of Agriculture said Feb. 22.
Soybean oil for May delivery fell 0.9 percent to 49.98 cents a pound on the Chicago Board of Trade. Its premium to palm oil was $312.35. They are the most consumed oils. Soybeans for May delivery dropped 0.7 percent to $14.255 a bushel.
Refined palm oil for delivery in September was little changed at 6,786 yuan ($1,089) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month fell 0.4 percent to 8,390 yuan a ton.
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