Palm oil headed for a third weekly decline to cap the worst run since July on speculation that increasing production will boost reserves in Indonesia and Malaysia, the biggest suppliers of the most consumed cooking oil.
The contract for December delivery was little changed at 2,270 ringgit ($705) a metric ton on the Bursa Malaysia Derivatives at 12:09 p.m. in Kuala Lumpur, down 1.3 percent this week. A third weekly decline would be the longest streak of such losses since July 26. Palm for physical delivery in October was at 2,310 ringgit yesterday, data compiled by Bloomberg show.
Palm, which has dropped 13 percent in the past year, is produced year-round with supply accelerating in the second half because of growing cycles. Stockpiles will begin to increase from September and should keep expanding at least until January, according to Dorab Mistry, director at Godrej International Ltd.
“The market is falling due to higher production, which is adding to inventories,” said Donny Khor, deputy director of futures and commodities at RHB Investment Bank Bhd. in Kuala Lumpur. “Exports are higher, but not good enough to prevent the piling up of stockpiles.”
Shipments from Malaysia rose 6.5 percent to 1.24 million tons in the first 25 days of September from the same period a month earlier, according to surveyor Intertek. That’s slower than the 13 percent growth in the first 20 days of the month.
Soybeans for delivery in November were little changed at $13.1575 a bushel on the Chicago Board of Trade. Soybean oil for December delivery declined 0.5 percent to 41.85 cents a pound.
Refined palm oil for January delivery fell 0.6 percent to 5,370 yuan ($877) a ton on the Dalian Commodity Exchange. Soybean oil decreased 0.5 percent to 7,004 yuan.
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