Bloomberg News

Palm Oil Drops Most in Two Months on Higher Global Soy Reserves

December 12, 2011

Dec. 12 (Bloomberg) -- Palm oil fell the most in more than two months on concern rising soybean stockpiles will boost global vegetable oil supplies and as exports fell from Malaysia, the second-biggest producer.

The February-delivery contract dropped 2.8 percent, the most since Sept. 26, to 2,998 ringgit ($949) per metric ton on the Malaysia Derivatives Exchange in Kuala Lumpur. Futures gained 0.7 percent last week.

Global soybean reserves will be 1.5 percent bigger than last month’s estimate and U.S. stockpiles will rise 15 percent to a five-year high, the U.S. Department of Agriculture said on Dec. 9. The forecast for U.S. exports was cut to 1.3 billion bushels from 1.325 billion in November. That compares with 1.501 billion bushels in the previous year.

“Palm oil is reacting as a spill-over effect to the lower close in Chicago after the USDA reported higher soybean stockpiles,” Ryan Long, vice president of futures and options at OSK Holdings Bhd., said by phone from Kuala Lumpur.

January-delivery soybeans fell on Dec. 9 by as much as 2.9 percent to $11.0025 a bushel on the Chicago Board of Trade, the lowest price for a most-active contract since Oct. 8, 2010. It was 0.5 percent lower at $11.0125 at 3:45 p.m. in Mumbai today.

“Rains in Argentina and Brazil’s soybean areas have also been favorable for planting,” said Chandran Sinnasamy, trading head at Kuala Lumpur-based LT International Futures (M) Sdn.

Palm oil exports from Malaysia declined 5.1 percent to 443,699 tons in the first 10 days of December from the same period a month earlier, surveyor Intertek said today.

Palm oil for delivery in May retreated 1.4 percent to close at 7,860 yuan ($1,236) per ton on the Dalian Commodity Exchange. Soybean oil for September delivery declined 1.3 percent to 8,718 yuan per ton.

--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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