May 13 (Bloomberg) -- Palm oil dropped from a four-week high after crude oil retreated for a third day, cutting the appeal of vegetable oils used as biofuel feedstock.
The contract for July delivery fell 0.4 percent to 2,310 ringgit ($771) a metric ton on the Bursa Malaysia Derivatives. Futures ended at 2,319 ringgit on May 10, the highest price at close for the most-active contract since April 12.
West Texas Intermediate crude fell in New York as the Organization of Petroleum Exporting Countries boosted output to the highest level in five months. Palm oil reserves fell 11 percent to 1.93 million tons in April, the lowest level since June, according to the Malaysian Palm Oil Board. Stockpiles may stay “relatively elevated,” particularly in the second half, on strong supplies, according to RHB Investment Bank Bhd.
“In the current scenario, we have too much inventory and are dependent on biodiesel to help absorb the excess supply,” Alvin Tai, an analyst at RHB, wrote in a report today. “Palm oil should rightfully be greatly impacted by crude oil.”
The price assumption for palm oil in 2013 was cut to 2,400 ringgit from 2,750 ringgit to 2,800 ringgit, Tai said. Output rose 3.1 percent to 1.37 million tons in April, while exports dropped 5.6 percent to 1.45 million tons, the board said May 10.
Exports from Malaysia plunged 17 percent to 380,047 tons in the first 10 days of this month, surveyor Intertek said May 10. Shipments dropped 18 percent to 377,193 tons from the same period in April, according to Societe Generale de Surveillance.
Stockpiles at major ports in China, the second-biggest importer, climbed last week to a record 1.35 million tons, up about 50,000 tons from a week earlier, the China National Grain and Oils Information Center said in a report e-mailed today.
Refined palm oil for September delivery closed little changed at 6,118 yuan ($995) a ton on the Dalian Commodity Exchange, while soybean oil fell 0.6 percent to end at 7,482 yuan. On the Chicago Board of Trade, soybeans for July were little changed at $14.0025 a bushel. Soybean oil fell 0.3 percent to 49.09 cents a pound.
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