Palm oil declined as a drop in crude oil reduced the appeal of vegetable oils as biofuel feedstock and falling Malaysian exports signaled slowing demand.
The contract for delivery in October fell 0.6 percent to 2,258 ringgit ($710) a metric ton on the Bursa Malaysia Derivatives. Futures lost 5.4 in the past two weeks, reaching 2,222 ringgit on July 16, the lowest price for most-active futures since Dec. 13. Palm for local physical delivery in August was at 2,340 ringgit, data compiled by Bloomberg show.
West Texas Intermediate crude declined, extending yesterday’s steepest drop in more than a week as weaker-than-forecast U.S. economic data raised concern that growth will stall in the world’s biggest consumer of oil. A record 5.6 million tons of palm was used for fuel in 2012, according to Oil World, a Hamburg-based research company.
“When crude oil prices drop, the use of palm biodiesel comes down,” said James Ratnam, an analyst at TA Securities Holdings Bhd. in Kuala Lumpur. “Demand is still not coming in strongly. Exports are weak.”
Shipments from Malaysia, the world’s largest producer after Indonesia, fell 13 percent to 794,081 tons in the first 20 days of July from the same period last month, surveyor SGS (Malaysia) Sdn., said yesterday.
Soybean oil for delivery in December lost 0.4 percent to 45.15 cents a pound on the Chicago Board of Trade. Soybeans for delivery in November were little changed at $12.8825 a bushel. Refined palm oil for January delivery gained 0.3 percent to close at 5,634 yuan ($918) a ton on the Dalian Commodity Exchange. Soybean oil advanced 0.8 percent to end at 7,314 yuan.