Palm oil retreated from a two-week high as exports from Malaysia declined amid speculation that demand may slow after the Ramadan season, boosting stockpiles from a two-year low in the world’s second-largest producer.
The contract for September delivery dropped 0.8 percent to end at 2,377 ringgit ($747) a metric ton on the Bursa Malaysia Derivatives. Futures closed yesterday at the highest price for the most-active contract since June 25. Palm for local physical delivery in July was at 2,400 ringgit, data compiled by Bloomberg show.
Shipments from Malaysia fell 16 percent to 352,375 tons in the first 10 days of July, surveyor Intertek said today. Exports dropped 16 percent in the same period, according to SGS (Malaysia) Sdn. Inventories fell 9.4 percent to 1.65 million tons in June from a month earlier, the lowest since March 2011, data from the nation’s palm oil board showed today. Exports climbed 0.3 percent to 1.41 million tons, while output rose 2.3 percent to 1.42 million tons.
“Exports won’t increase because it’s not a festive season and there’s no seasonal demand,” said Gnanasekar Thiagarajan, a director at Commtrendz Risk Management Services Pvt. in Mumbai. “Once Ramadan is over, there is not going to be any demand at all. There is going to be a huge crop in India because of the good rains. These are all negative factors, which is why the market is not excited about this particular news now.”
Consumption increases during the Muslim fasting month of Ramadan, which started this week, when observers break day-long fasts with communal meals that raise total cooking oil demand.
Farmers in India have planted crops including rice, oilseeds and cotton in 25.1 million hectares (62 million acres) so far this year, 85 percent more than the same period a year earlier, the Agriculture Ministry said June 28. The best start to the monsoon in at least 12 years in India, the largest palm oil buyer, may spur plantings, according to Shashanka Bhide, an economist at the New Delhi-based National Council of Applied Economic Research.
Soybean oil for delivery in December lost 0.3 percent to 45.85 cents on the Chicago Board of Trade, while soybeans for delivery in November gained 0.3 percent to $12.80 a bushel.
Refined palm oil for January delivery gained 0.2 percent to close at 5,882 yuan ($959) a ton on the Dalian Commodity Exchange, while soybean oil for delivery in the same month climbed 0.2 percent to end at 7,286 yuan.