Palm oil declined to the lowest level in almost three months on concern that a bumper soybean crop in Brazil, poised to be the world’s largest grower this year, will boost global oilseed supplies and damp demand.
The contract for May delivery dropped 1.3 percent to 2,366 ringgit ($761) a metric ton on the Malaysia Derivatives Exchange, the lowest most-active price at close since Dec. 20. Futures have lost 30 percent in the past year.
About 11.9 million tons of soybeans and its products were scheduled for shipment at major ports in Brazil as of yesterday, up from 10.77 million tons a week ago, according to SA Commodities and Unimar Agenciamentos Maritimos. The country is set to overtake the U.S. this year as the top exporter of the beans that can be crushed to make soybean oil.
“Buyers know that the supply is coming, so they may be only willing to offer lower prices,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd., referring to oilseeds from Brazil.
Soybean oil for May delivery fell 0.8 percent to 49.15 cents a pound on the Chicago Board of Trade, while soybeans for May delivery retreated 0.6 percent to $14.3875 a bushel. Soybean oil was about 1.43 times costlier than palm.
Refined palm oil for delivery in September dropped 1.2 percent to close at 6,264 yuan ($1,008) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month declined 0.4 percent to end at 8,008 yuan a ton.