Palm oil fell to the lowest level in more than a week after crude oil declined yesterday, reducing the appeal of vegetable oils as feedstock for biofuels.
The contract for July delivery fell 1.2 percent to 2,259 ringgit ($740) a metric ton on the Bursa Malaysia Derivatives, the lowest price at close for the most-active futures since April 22. Futures declined 3.9 percent in April.
West Texas Intermediate crude gained 0.5 percent today after closing at the lowest level in more than a week yesterday as government data showed U.S. stockpiles climbed to the highest in 82 years. A record 5.6 million tons of palm oil was used for fuel in 2012, according to Oil World, a Hamburg-based research company.
“Crude oil weakened quite substantially and that will affect biodiesel demand for palm oil,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. Futures also declined after soybean and soybean oil prices fell, he said.
“Because these two products are usually used as substitutes, cheaper soybean oil may not bode well for price outlook for crude palm oil,” Lim said.
Soybeans for July delivery gained 0.5 percent to $13.7925 a bushel on the Chicago Board of Trade, after declining 1.9 percent yesterday. Soybean oil was little changed at 48.81 cents a pound. Soybean oil’s premium over palm was at $335.99 a ton today, according to data compiled by Bloomberg.
Refined palm oil for September delivery retreated 2 percent to close at 5,834 yuan ($948) a ton on the Dalian Commodity Exchange, the lowest price for the most-active contract since September 2009. Soybean oil fell 1.7 percent to 7,184 yuan a ton, the lowest close since February 2010.