Palm oil dropped to the lowest level in more than two weeks amid forecasts for larger soybean harvests in the U.S., Brazil and Argentina, adding to supplies of oilseeds and cutting demand for the tropical oil.
The contract for April delivery fell 0.3 percent to 2,497 ringgit ($807) a metric ton on the Malaysia Derivatives Exchange, the lowest close for most-active futures this month.
U.S. output may climb 11 percent to 3.34 billion bushels in 2013-2014, the government said Feb. 11. Brazil and Argentina are forecast to produce a record 136.5 million tons this year, the U.S. Department of Agriculture said Feb. 8. Malaysian palm shipments rose 18 percent in the first 10 days of February, according to market surveyor Intertek.
“While exports continue to be good, nervousness about the large South American crop and the soybean market in the U.S. is pressuring the futures,” said Paramalingam Supramaniam, director at Pelindung Bestari Sdn. in Kuala Lumpur. “The South American crop is weighing on the current price.”
Inventories in Malaysia slid 1.9 percent to 2.58 million tons last month from 2.63 million, the palm oil board said yesterday. The drop was less than expected in a Bloomberg survey. Output fell 10 percent to 1.6 million tons, while exports slid 1.6 percent to 1.62 million tons.
Soybean oil’s premium over palm was at $336.95 a ton today, compared with a five-year average of $182.33, according to data compiled by Bloomberg. Soybean oil for May delivery declined 0.4 percent to 51.88 cents a pound on the Chicago Board of Trade. Soybean oil, a substitute for palm in food and fuel, is about 1.42 times costlier.