PALM oil tumbled to the lowest level in nine months and was poised to enter a bear market after the US government forecast record inventories of soybeans used to produce an alternative cooking oil.
Futures dropped as much as 1.3 per cent to RM2,316 a metric tonne on the Bursa Malaysia Derivatives, the lowest level since Oct 7. A close at RM2,320 would be 20 per cent less than the RM2,901 settlement on March 10, meeting the common definition of a bear market. Prices ended the morning session at RM2,318.
Palm, used in everything from food to biofuels, slumped 13 per cent this year as usage in biodiesel trailed estimates amid expanding production.
Record stockpiles of soybeans are adding to a global glut of cooking oils as increasing supplies send prices of corn and wheat into bear markets, cutting world food costs measured by the United Nations for a third month in June. Petroleum prices have also dropped for three straight weeks.
“The declines in soybean oil and crude oil will weigh heavily on palm,” said David Ng, a Kuala Lumpur-based derivatives specialist at Phillip Futures Sdn Bhd. “The spread between soybean oil and palm oil has narrowed quite significantly and a lot of buyers are shifting to other alternatives, mainly soybean oil and sunflower.”
Palm oil’s discount to soybean oil narrowed 70 per cent in the past year to about US$84 a tonne, data compiled by Bloomberg show. That’s encouraging refiners in India, the world’s largest palm buyer, to turn to soybean and sunflower oils.
India’s palm imports probably fell for a second month in June to 625,000 tonnes from a year earlier, a Bloomberg survey showed last week.
Futures may rally less than earlier forecast as demand misses estimates and an El Nino starts later than expected, according to Dorab Mistry, director at Godrej International Ltd. Prices may climb to RM2,800 by December if the weather event occurs from mid-August, Mistry said on June 26, cutting his March forecast for an increase to RM3,500.
Production in Indonesia may reach a record 30.5 million tonnes or more this year while Malaysia’s output will total an all-time high of 19.7 million tonnes to 19.9 million tonnes, according to Mistry. The two Southeast Asian producers together account for 86 percent of world supplies.
US farmers will harvest 3.8 billion bushels of soybeans this year, compared with 3.635 billion estimated in June and last year’s crop of 3.289 billion, the Department of Agriculture estimates. World output will be 304.8 million tonnes from a previous estimate of 300 million tons, while inneventories will be a record 85.31 million tonnes, the agency said on July 11.
Soybean oil futures were little changed at 36.93 cents a pound on the Chicago Board of Trade, after declining 1.7 per cent on July 11. Soybeans slumped to US$10.65 on July 11, the lowest level since October 2010, and traded at US$10.6875 yesterday. Prices declined for a 10th day through July 11, the longest slump since 1973.
Refined palm oil for January delivery fell as much as 2.2 per cent to 5,676 yuan (US$914) a tonne on the Dalian Commodity Exchange, the lowest level since Jan 30, before trading at 5,710 yuan. Soybean oil lost as much as 1.3 per cent to 6,468 yuan, lowest price since Jan 30. — Bloomberg
Read more: http://www.theborneopost.com/2014/07/15/palm-set-for-bear-market-as-record-soybean-reserves-loom/#ixzz37g3XXoYl
No comments:
Post a Comment