Palm oil posted its biggest weekly loss since November as record reserves and declining exports in Malaysia, the second-largest producer, prompted analysts to push back forecasts for a price rebound during the low-output season.
The contract for March delivery lost 0.9 percent to close at 2,366 ringgit ($783) a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Futures, which dropped 1 percent yesterday after the inventory data was released, fell 4.1 percent this week, the most since the five days ending Nov. 9.
Stockpiles rose 2.4 percent to 2.63 million tons in December from a revised 2.57 million tons a month earlier, according to the Malaysian Palm Oil Board. That’s compared with the median estimate for a decline in holdings to 2.53 million tons, according to a Bloomberg survey. Output fell 5.9 percent to 1.78 million tons, the board said. Production typically starts declining from November onwards, with January and February usually recording the lowest output each year.
“Stocks are more burdensome than market expectations,” Ivy Ng, an analyst at CIMB Group Holdings Bhd., said in a report today. “This may further delay the recovery in crude palm oil prices until stocks fall back to the 2 million ton mark, while the weak palm oil export data for the first 10 days of 2013 may weaken sentiment.”
Exports dropped 25 percent to 373,462 tons in the first 10 days of January from a revised 499,732 tons in the first 10 days of December, Intertek said yesterday. Shipments retreated 34 percent, according to Societe Generale de Surveillance. Malaysia changed its export-tax structure from Jan. 1 to help draw down the reserves, with a zero rate applicable for this month.
Indonesia, the largest producer, is considering reducing export taxes. “Ideally it should be at zero too,” Trade Minister Gita Wirjawan said in Jakarta. The possible reduction “can be at any level, as long as it can help maintaining the downstream-industry development and our competitiveness,” he said, referring to processors and refiners.
Palm oil for May lost 1.3 percent to end at 6,640 yuan ($1,068) a ton on the Dalian Commodity Exchange. Soybean oil for May fell 0.9 percent to close at 8,488 yuan a ton.
Soybeans for March delivery declined 0.8 percent to $13.6825 a bushel on the Chicago Board of Trade. Soybean oil for delivery in March dropped 0.5 percent to 49.49 cents a pound.