Palm Oil Drops to Two-Month Low as Chinese Demand Seen FallingRanjeetha Pakiam
Palm oil slumped to the lowest in more than two months as data showed exports fell in the first half of July, reinforcing concern demand may slow as China’s economy cools. Futures in Dalian plunged to a four-year low.
The contract for September delivery retreated 1 percent to 2,278 ringgit ($714) a metric ton on the Bursa Malaysia Derivatives, the lowest level at close for the most-active futures since May 7. Palm for local physical delivery in August was at 2,320 ringgit, data compiled by Bloomberg show.
Shipments from Malaysia, the largest producer after Indonesia, fell 23 percent to 547,857 in the first 15 days from same period in June, surveyor Intertek said today. Exports dropped 24 percent, according to SGS (Malaysia) Sdn. China’s economy slowed for a second quarter as gains in factory output decelerated, according to government data today.
“With this general pessimism about demand for crude palm oil, prices are trending down,” said Sim Han Qiang, an analyst at Phillip Futures Pte in Singapore. “If China’s economy is likely to slow going forward, that will also translate to weaker demand for crude palm oil. We believe the trend is still down and futures are likely to test 2,200 ringgit.”
Refined palm oil for January delivery fell 3.1 percent to 5,640 yuan ($919) a ton on the Dalian Commodity Exchange, the lowest price at close for the most-active contract since July 2009, while soybean oil for delivery in the same month lost 1.5 percent to 7,174 yuan, equaling the lowest close in February 2010.
Malaysia left the tax on crude palm oil exports unchanged for a sixth month in August at 4.5 percent, according to a Customs Department statement.
Soybean oil for delivery in December declined 1 percent to 45.28 cents a pound on the Chicago Board of Trade, while soybeans for delivery in November lost 0.3 percent to $12.5325 a bushel.