Palm Oil Drops Most in Two Months as U.S. Soybean Acres May Gain
Palm oil declined the most in more than two months on speculation that U.S. farmers may increase soybean planting, potentially boosting supplies of the crop that can be crushed to make a substitute oil.
The June-delivery contract fell 1.5 percent to close at 3,559 ringgit ($1,161) a metric ton on the Malaysia Derivatives Exchange, the biggest drop for the most-active contract since Jan. 30. Futures closed at 3,613 ringgit on April 10, the highest since March 7, 2011. Markets in Malaysia were closed yesterday for a holiday.
The soybean premium to corn in the harvest season has gained 18 percent since Jan. 31, bolstering profit prospects for the oilseed, which is cheaper to produce, Brian Basting, an analyst at Advance Trading Inc., said yesterday. Soybeans rallied 16 percent between January and March, the biggest quarterly price rally in more than a year.
“There’s talk that more acreage may be switched to soybeans from corn, because the soybean price is more attractive,” said Chandran Sinnasamy, trading head at Kuala- Lumpur based LT International Futures (M) Sdn. Palm was due for a “sharp correction” after the gains, he said.
Soybean stockpiles in the U.S. will total 250 million bushels (6.8 million tons) on Aug. 31, the U.S. Department of Agriculture said April 10, cutting its forecast from 275 million bushels in March. Analysts had predicted inventories would fall to 242 million bushels, a Bloomberg survey showed.
The USDA data were “within expectations -- no surprise bullishness -- so some profit-taking came in and pushed the market lower,” Chandran said, referring to soybeans, which dropped 0.4 percent yesterday.
Soybeans for November delivery climbed 0.6 percent to $13.6775 a bushel on the Chicago Board of Trade. Soybean oil for May was little changed at 56.52 cents per pound.
Palm oil for September gained 0.3 percent to close at 8,932 yuan ($1,416) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month advanced 0.3 percent to 9,950 yuan a ton.
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