Palm oil retreated for a second day on concern that exports from Indonesia and Malaysia, the world’s largest producers, may drop this month as traders are lured by easing prices of alternate vegetable oils.
The contract for delivery in March declined as much as 0.9 percent to 2,552 ringgit ($784) a metric ton on the Bursa Malaysia Derivatives and was at 2,559 ringgit at 11:35 a.m. in Kuala Lumpur. The drop pared gains to 4.9 percent this year.
Global palm exports may decline this season for the first time in 16 years as makers of biofuel and cooking oil substitute the tropical oil with sunflower and soybean oils, Oil World said yesterday. Exports will total 43.75 million tons in the 2013-2014 season that began Oct. 1, down 1.1 percent from a year earlier, it said.
“Palm has to decline more to attract further buying interest,” said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt. Ltd., in Mumbai. “The soybean oil-palm oil differential is not favoring palm. Weakness in the soy complex is driving the market lower.”
Palm oil’s discount to soybean oil has narrowed to $82.9 a ton from $297.44 at the start of the year, according to data compiled by Bloomberg. Shipments from Malaysia fell 14 percent to 640,240 tons in the first 15 days of December from a month earlier, surveyor Intertek said.
Soybean oil for March delivery dropped 0.5 percent to 39.44 cents a pound on the Chicago Board of Trade. Soybeans declined 0.6 percent to $13.2725 a bushel.
Refined palm oil for May delivery slid 1.1 percent to 6,012 yuan ($990) a ton on the Dalian Commodity Exchange. Soybean oil decreased 0.9 percent to 6,956 yuan.
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