Palm Oil Drops on Forecasts for Higher Global Oilseed Stockpiles
Palm oil fell on speculation that rising global oilseed stockpiles may curb demand for the tropical oil, expanding inventories in top producers.
The contract for May delivery dropped as much as 0.8 percent to 2,395 ringgit ($772) a metric ton on the Malaysia Derivatives Exchange, and ended the morning session at 2,400 ringgit in Kuala Lumpur. Futures tumbled 6.6 percent last week.
Global palm oil inventories will gain to a record 7.203 million tons this season, according to the U.S. Department of Agriculture. Dorab Mistry, a director at Godrej International Ltd., who’s due to address an industry conference in Kuala Lumpur tomorrow, has said palm’s outlook is bearish this year as global oilseed production increases, including soybean harvests in the Americas.
“There is an expectation in the market that when production picks up palm oil stockpiles will again climb to a record, maybe in May,” Chandran Sinnasamy, head of trading at LT International Futures Sdn., said by phone from Kuala Lumpur.
Inventories probably contracted 5.4 percent in February from a month earlier, the steepest drop since April, to 2.44 million tons, the median of estimates from two plantation companies and six analysts showed. Stockpiles, which reached a record 2.63 million tons in December, stood at 2.58 million tons in January. Futures have tumbled 26 percent in the past year as global supply reached a record.
“Trade in palm oil is going to hinge on the price forecasts from key industry speakers such as Dorab Mistry tomorrow,” Chung Yang Ker, an analyst at Phillip Futures Pte., said by phone from Singapore.
Soybeans for May delivery was little changed at $14.6325 a bushel on the Chicago Board of Trade. Soybean oil for May was at 50.30 cents a pound from 50.26 cents yesterday.
Refined palm oil for delivery in September was little changed at 6,648 yuan ($1,067) a ton on the Dalian Commodity Exchange. Soybean oil for delivery in the same month was also little changed at 8,334 yuan a ton.
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