Palm Oil Snaps Four-Day Rally on European Debt Crisis Concerns
Palm oil snapped a four-day rally on renewed concern that Europe’s debt crisis will derail the global economic recovery, hurting demand for commodities.
The contract for delivery in April fell 0.7 percent to close at 2,549 ringgit ($825) a metric ton on the Malaysia Derivatives Exchange. Futures gained 5 percent in the four sessions through yesterday, closing at a three-month high after the Malaysian government said exports may be allowed at zero duty for a third month in March.
Spanish 10-year government yields jumped to a seven-week high yesterday as the country’s Premier Mariano Rajoy faces opposition calls to resign amid contested reports about illegal payments. Copper dropped for the first time in three days on speculation demand will slow in Europe, which accounts for 18 percent of demand. Rubber declined from a 10-month high.
“Europe’s problems are not fully solved as reflected in the increase in Spain’s bond yield yesterday,” said Alan Lim Seong Chun, an analyst at Kenanga Investment Bank Bhd. The drop in crude yesterday also cut the appeal of biofuels, he said.
Oil for March delivery was at $96.42 a barrel in New York after dropping 1.6 percent yesterday, the most since Dec. 6.
Malaysia will allow crude palm oil exports at zero duty for another month if prices remain below the threshold of 2,250 ringgit a ton, Plantation Industries & Commodities Minister Bernard Dompok said yesterday. The second-largest producer set the tariff at zero in January and extended it to February in a move to ease stockpiles, which were at a record 2.63 million tons in December, according to Malaysian Palm Oil Board data.
“Large stockpiles will continue to limit the potential for a sustained market rally,” Abah Ofon, an analyst at Standard Chartered Plc, wrote in a report today. The average price forecast for 2013 was cut to 2,688 ringgit a ton from 2,825 ringgit, according to the report.
Refined palm oil for delivery in September fell 0.5 percent to close at 7,156 yuan ($1,148) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month dropped 0.8 percent to end at 8,822 yuan a ton.
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