Palm oil dropped after a three-day advance amid expectations that rising production will expand a glut of the commodity used in food and fuels.
The contract for December delivery fell 0.8 percent to 2,311 ringgit ($716) a metric ton on the Bursa Malaysia Derivatives in Kuala Lumpur. Futures lost 5.2 percent this year.
Prices decreased for six quarters through last month, the longest losing run since at least 1995. Stockpiles should expand from last month through at least January as supply climbs, according to Dorab Mistry, director at Godrej International Ltd. The U.S. Department of Agriculture has predicted global reserves gaining 17 percent to a record 9.2 million tons in 2013-2014.
“Investors are very cautious that supply will outstrip demand,” said Tan Chee Tat, an analyst at Phillip Futures Pte in Singapore. There’s a bearish outlook, especially in the second half, because it’s the high-production cycle, he said.
Declines in soybean oil also hurt palm because of possible substitution, said Tan.
Soybean oil for delivery in December lost as much as 1.1 percent to 39.82 cents a pound on the Chicago Board of Trade, the lowest for the most-active contract since September 2010, and was at 39.97 cents. Soybeans for November delivery were little changed at $12.695 a bushel.
Indonesian stockpiles of the most-used oil derived from crops will rise 66 percent to 3 million tons by the end of 2013-2014, the USDA has said. The Southeast Asian nation is the largest producer.