Palm Oil Heads for Worst Losing Streak Since 2006 on Inventories
The contract for May delivery dropped as much as 1.1 percent to 2,370 ringgit ($766) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,377 ringgit in Kuala Lumpur. The losing streak is the longest since March 2006. Futures tumbled 6.3 percent last month.
Palm, used in foods, biofuels and cosmetics, has slumped 28 percent in the past year as supply and stockpiles surged to records and demand for the tropical oil fell due to a global economic slowdown. Inventories in January were at 2.58 million tons, holding near an all-time high of 2.63 million tons in December, according to the Malaysian Palm Oil Board. Exports declined 9.1 percent to 1.33 million tons in February from the previous month, surveyor Intertek said yesterday.
“We were hoping to see an increase in exports but it was a decline month-on-month, and that’s one of the factors that pressured prices,” said Benny Lee, chief market strategist at Jupiter Securities Sdn. in Kuala Lumpur. “Inventories will probably stay at these levels.”
An increase in Malaysia’s export taxes on crude palm oil this month will curb demand, Lee said. A 4.5 percent tax will be imposed on shipments in March after allowing duty-free exports in the first two months of this year.
Soybean oil for May was little changed at 49.14 cents a pound on the Chicago Board of Trade. Soybeans for May delivery were also little changed at $14.5275 a bushel.
Refined palm oil for delivery in September was little changed at 6,632 yuan ($1,066) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month declined as much as 0.8 percent to 8,224 yuan a ton, the lowest price for the most-active futures since September 2010.
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