Palm oil fell on concern that inventories in Malaysia, the second-largest producer, will expand as a global economic slowdown weakens demand for the vegetable oil used in food and biofuels.
The contract for January delivery, which has the largest volume and open interest, closed 0.2 percent lower at 2,466 ringgit ($808) a metric ton on the Malaysia Derivatives Exchange. The most-active contract has declined 23 percent this year, touching a three-year low of 2,230 ringgit on Oct. 3.
Futures may decline to 2,200 ringgit, the lowest level since November 2009, in the next four to six weeks as crude oil drops amid a global slowdown, Dorab Mistry, director of Godrej International Ltd., said in Kuala Lumpur today. Inventories in Malaysia will reach or exceed a record 3 million tons on Jan. 1, he said.
Rising production and record stockpiles will limit any rally in prices, Vijay Mehta, a director at Commodity Links Pte, said by phone from Singapore. “Demand is fairly good around these levels.”
Palm-oil stockpiles in Malaysia may peak in December and drop after that following the government tax changes and as biofuel demand emerges, according to James Fry, chairman of LMC International Ltd. Reserves in Malaysia increased to a record 2.48 million tons last month, according to data from the Malaysian Palm Oil Board.
Malaysia will cut the export duty on crude palm oil and abolish a duty-free shipment quota from 2013, Plantation Industries and Commodities Minister Bernard Dompok said on Oct. 12. The new rates will range from 4.5 percent to 8.5 percent. The existing levy is 23 percent.
Soybean oil for December delivery advanced 0.7 percent to 50.34 cents a pound on the Chicago Board of Trade. Soybeans for November delivery climbed 0.5 percent to $14.995 a bushel.
Palm oil for January delivery on the Dalian Commodity Exchange rose 1.2 percent to close at 6,926 yuan ($1,106) a ton. Soybean oil for delivery in the same month increased 1.5 percent to end at 9,138 yuan a ton.