Palm Oil Drops as South American Soybean Crop Prospects Improve
Palm oil declined, paring a weekly advance, as forecasts for improving soybean crop conditions in South America eased concerns global oilseed supply will dwindle.
The contract for January delivery, which had the largest open interest, fell 1.6 percent to close at 2,396 ringgit ($779) a metric ton on the Malaysia Derivatives Exchange. Futures climbed 3.5 percent this week, the first such gain since the five days ended Oct. 26. The bourse was shut yesterday.
More normal rain in the Brazilian regions of Mato Grosso, Goias, Minas Gerais and western Bahia will favor soybean planting and development hurt by hot, dry weather, Telvent DTN Inc. said in a report yesterday. Combined corn and soybean output in Brazil and Argentina will rise to a record next year, the U.S. Department of Agriculture said on Nov. 9.
“The previous concern was that Brazil was too dry,” Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd., said by phone in Kuala Lumpur. “The arrival of the rain has improved the prospects of soybean oil production globally.”
Exports from Malaysia, the largest producer after Indonesia, were little changed at 769,087 tons in the first 15 days of November from 769,534 tons in the same period in October, Intertek said today.
Soybean oil for delivery in January dropped 0.9 percent to 47.37 cents a pound on the Chicago Board of Trade, extending yesterday’s 0.5 percent decline for the most-active contract. Soybeans for January delivery lost as much as 1.3 percent to $13.8325 a bushel, the lowest for the most-active contract since June 22, before trading at $13.88.
Palm oil for May delivery fell 1.2 percent to close at 6,670 yuan ($1,070) a ton on the Dalian Commodity Exchange. Soybean oil for the same month lost 0.6 percent to end at 8,370 yuan a ton.
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