Palm Oil Drops on Speculation Bull-Market Rally May Curb Demand
Palm oil declined for a second day to the lowest level in a week on speculation that last week’s rally into a bull market will curb importers’ demand.
The contract for delivery in January lost 1.3 percent to 2,547 ringgit ($801) a metric ton on the Bursa Malaysia Derivatives, matching the Oct. 30 close for most-active futures. Palm for physical delivery in November was at 2,580 ringgit today, data compiled by Bloomberg show.
Futures increased 7.5 percent last week, the most since April 2009, and are heading for the first annual gain in three years on speculation that output in top producers Indonesia and Malaysia may be less than analysts expected. Prices rose to 2,628 ringgit on Nov. 1, the highest close since September 2012 and 21 percent more than the 2,167 settlement on July 29, meeting the common definition of a bull market.
“Buyers are confused the way prices have gone up,” said Vijay Mehta, director of Commodity Links Pte in Singapore. “They think prices are on the higher side.”
Production in Malaysia fell 2.1 percent to 1.87 million tons from a month earlier, according to the median of six estimates from plantation companies, analysts and traders compiled by Bloomberg. Exports were little changed at 1.6 million tons, while reserves rose 3.4 percent to 1.84 million tons, the highest since April, the survey showed. The Malaysian Palm Oil Board is scheduled to release the data on Nov. 11.
Soybean oil for December delivery rose 0.1 percent to 41.20 cents a pound on the Chicago Board of Trade, while soybeans for delivery in January climbed 0.2 percent to $12.5325 a bushel.
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