Palm oil shipments from Indonesia, the world’s largest producer, dropped for a third straight month in August to the lowest level since October 2012 as higher supplies of substitute cooking oils reduced demand.
Sales fell 7 percent to 1.48 million metric tons from 1.59 million tons in July, said the Indonesian Palm Oil Association. That’s the least since 1.42 million tons shipped in October and compares with 1.41 million in August 2012, data compiled by Bloomberg show. The median of estimates in a survey published Sept. 17 was for a 0.6 percent drop to 1.58 million tons.
Prices are heading for a third year of decline as slowing growth in China and the European Union hurt demand for the vegetable oil, used in everything from candy to biofuel. Stockpiles are set to expand as domestic production accelerates in the second half because of growing cycles. While global output will increase from a year earlier, growth in consumption may slow because of rising competition from sunflower and soybean oil, according to Hamburg-based researcher Oil World.
“Harvests of rapeseed and sunflower seeds in the U.S. have drastically cut demand for palm oil,” the association known as Gapki said in an e-mail. Consumption declined in the Europe Union and some Asian countries as well, said the group.
World supplies of rapeseed may climb to a record as production increases from Canada to the European Union, Oil World said Sept. 17. Palm oil production may be 58.85 million tons in the season that begins Oct. 1, compared with 56.06 million tons a year earlier, Oil World said. Demand is expected to rise to 58.18 million tons from 55.55 million tons, it said.
Shipments slumped 69 percent to 18,410 tons to the U.S. from July and fell 3 percent to 359,230 tons to EU countries, Gapki data showed. Imports by Bangladesh declined 58 percent and by Pakistan were 41.5 percent lower. India, the world’s largest importer, bought 349,690 tons last month, up 1 percent, while China’s purchases rose 8 percent to 170,300 tons.
Palm oil for delivery in December traded at 2,319 ringgit ($736) per ton on Bursa Malaysia Derivatives by 5 p.m. in Kuala Lumpur today. That’s a 42 percent plunge for futures from an almost three-year high of 3,967 ringgit in February 2011.