Bloomberg News

Palm Oil Declines for First Day in Four as Rally Spurs Sales

October 13, 2011

Oct. 13 (Bloomberg) -- Palm oil dropped for the first time in four days as a rally to the highest level in more than a week yesterday spurred some investors to lock in gains.

December-delivery futures declined 0.7 percent to close at 2,844 ringgit a metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Futures have lost 25 percent this year.

Palm oil rose 3.3 percent in the three sessions before today on higher exports from Malaysia during the first 10 days of October and lower soybean output estimates. Soybean output will total 3.06 billion bushels, down from last year’s 3.329 billion, the U.S. Department of Agriculture said yesterday.

“Commodities have reacted ahead of the bullish data as can be seen by the gains this week, and people have priced in the news,” Ivy Ng, an analyst at CIMB Group Holdings Bhd., said by phone from Kuala Lumpur. “It’s more like buy on rumors and sell on news.”

Futures also fell on concern that rising prices may cool demand, she said.

Soybeans for delivery in November fell 0.3 percent to $12.3525 a bushel on the Chicago Board of Trade at 3:40 p.m. in Mumbai, while soybean oil for December delivery was 0.2 percent lower at 51.76 cents per pound. Palm oil competes with soybean oil for use in food and fuel.

India, the world’s biggest buyer of palm oil, plans to provide financial incentives to farmers to boost domestic production and pare reliance on imports in the next five years, Farm Minister Sharad Pawar said.

The south Asian nation plans to develop oil palm as a major crop in the north-eastern states as the region’s weather is suitable for its plantation, Pawar said.

Good Exports

“Palm is going to consolidate at these levels ahead of the export data for the first half of the month,” Ryan Long, vice president of futures and options at OSK Holdings Bhd., said by phone from Kuala Lumpur. “We are expecting quite good exports this time.”

Malaysia’s palm oil exports climbed 31.8 percent to 496,918 tons in the first 10 days of October from the same period in September, according to surveyor Intertek. Exports advanced 25.1 percent to 486,882 tons, Societe Generale de Surveillance said.

Palm oil for delivery in May climbed 0.2 percent to close at 7,988 yuan ($1,251) per ton on the Dalian Commodity Exchange and soybean oil for delivery in the same month also gained 0.2 percent to 9,316 yuan a ton.

--With assistance from Prabhudatta Mishra in New Delhi. Editor: Thomas Kutty Abraham

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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