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Palm Oil Ends Little Changed as Output Decline Counters Exports

Palm oil ended little changed as a bigger-than-expected drop in output in Malaysia last month countered a decline in exports from the second-largest supplier.

The contract for May delivery ended at 2,450 ringgit ($787) a metric ton from 2,448 ringgit yesterday on the Malaysia Derivatives Exchange. Futures have lost 26 percent in the past year on rising global oilseed supplies and slowing demand.

Output slumped 19 percent to 1.3 million tons last month, the lowest level since April, the Malaysian Palm Oil Board said today. This was more than the 13 percent drop estimated in a Bloomberg survey published March 5. Exports fell 14 percent to 1.4 million tons, the steepest decline since July, according to the board. Inventories shrank to 2.44 million tons, matching the median of estimates in the survey. Malaysian reserves reached a record 2.63 million tons in December.

“If export trend continues the same way, then it won’t be good for prices,” Gnanasekar Thiagarajan, director at Mumbai- based Commtrendz Risk Management Services Pvt., said by phone. The decline in exports “nullifies the effects of lower production.”

Exports gained 2.2 percent to 438,549 tons in the first 10 days of March from 429,070 tons in the same period last month, according to Societe Generale de Surveillance. Shipments were 441,025 tons in the same period, surveyor Intertek said.

Exports from Indonesia, the largest producer, fell for a second straight month in January as sales to China declined, an industry group said today. Shipments, which include palm and kernel oils, dropped 1.4 percent to 1.87 million tons from 1.896 million tons in December, the Indonesian Palm Oil Association said in an e-mailed statement.

Soybean oil for May delivery was little changed at 50.32 cents a pound on the Chicago Board of Trade. Soybeans for May delivery gained 0.4 percent to $14.7725 a bushel.

Refined palm oil for delivery in September dropped 0.7 percent to close at 6,578 yuan ($1,058) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month declined 1.5 percent to end at 8,200 yuan a ton, the lowest level for the most-active contract at close since September 2010.

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

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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