Palm Oil Futures Retreat as Commodities Slump on Fed Outlook

Palm oil fell from the highest level in almost three months as commodities from oil to copper tumbled on concern the U.S. Federal Reserve may phase out stimulus.

The contract for delivery in September dropped 0.4 percent to close at 2,462 ringgit ($767) a metric ton on the Bursa Malaysia Derivatives. Futures earlier jumped to 2,491 ringgit, the highest price for the most-active futures since March 25. Palm oil for local physical delivery in July was at 2,480 ringgit today, according to data compiled by Bloomberg.

Chairman Ben S. Bernanke said the Fed may start tapering bond purchases that have fueled gains in markets globally, and end the program in 2014 should risks to the economy abate. The Standard & Poor’s GSCI Index of 24 raw materials lost as much as 2 percent to 622.91, the biggest intraday loss since May 10, as gold, crude oil and copper declined.

Bernanke’s comments “spooked the market, causing negative trading sentiments throughout,” said Sim Han Qiang, an analyst at Phillip Futures Pte. in Singapore. “But for crude palm oil, one thing that is supporting the prices from falling drastically is the weak ringgit which is supportive for demand. The export data confirms that the weak ringgit is supportive.”

The ringgit slumped 1.7 percent to 3.2035 per dollar, the biggest loss since November 2011, according to data compiled by Bloomberg. Exports from Malaysia climbed 16 percent to 928,810 tons in the first 20 days of this month, surveyor Intertek said today, while SGS (Malaysia) Sdn. reported a 14 percent gain. Demand for palm oil typically picks up ahead of Ramadan, which falls in July this year, when Muslims break day-long fasts with communal meals.

Soybean oil for December delivery fell 0.6 percent to 47.90 cents a pound on the Chicago Board of Trade, while soybeans for delivery in November declined 0.9 percent to $12.99 a bushel. Refined palm oil for January delivery dropped 0.6 percent to close at 6,198 yuan ($1,012) a ton on the Dalian Commodity Exchange, while soybean oil for delivery in the same month gained 0.2 percent to end at 7,692 yuan.

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